Trinidad Drilling Ltd. Reports Strong First Quarter 2012 Results; Higher Dayrates Drive Record Revenue and EBITDA Generation
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
TSX SYMBOL: TDG
CALGARY, May 8, 2012 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or "the Company") reported very successful first quarter 2012 results that reflect the solid position the Company holds in the industry. Ongoing demand for Trinidad's modern high performing fleet drove increased dayrates in the quarter and led to record revenue generation, despite slightly lower activity levels compared to the same quarter last year. Gross margin and gross margin - net percentage and EBITDA(1) also increased compared to the first quarter of 2011 as dayrate improvement outpaced cost increases and the Company remained focused on cost control.
"Trinidad's foresight and vision to assemble a technically advanced fleet of equipment that meets todays' challenges and is easily adaptable to a variety of plays is the key driver behind the success the Company has achieved in this quarter and for a number of years. Trinidad's ability to generate record EBITDA while transitioning a large number of rigs into new plays demonstrated the adaptability of our equipment, the strength of our contracts and the broadness of our customers' development plans," said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "The migration of our rigs is largely completed now and with approximately 85% of our fleet drilling oil or liquids-rich gas and our extensive long-term contract base, Trinidad is well positioned to perform well in the current market conditions."
(1) Please see the Non-GAAP Measures Definitions section of this document for further details.
| FINANCIAL HIGHLIGHTS | ||||
| Three months ended March 31, | ||||
| ($ thousands except share and per share data) | 2012 | 2011 | % Change | |
| Revenue(3) | 255,580 | 224,318 | 13.9 | |
| Gross margin(1) | 104,193 | 84,729 | 23.0 | |
| Gross margin percentage(1, 3) | 40.8% | 37.8% | 7.9 | |
| Gross margin - net percentage(1) | 44.3% | 41.4% | 7.0 | |
| EBITDA(1) | 91,240 | 63,813 | 43.0 | |
| Per share (diluted)(2) | 0.75 | 0.53 | 41.5 | |
| Adjusted EBITDA(1) | 91,951 | 69,623 | 32.1 | |
| Per share (diluted)(2) | 0.76 | 0.58 | 31.0 | |
| Cash provided by operations | 67,467 | 24,260 | 178.1 | |
| Per share (basic / diluted)(2) | 0.56 | 0.20 | 180.0 | |
| Funds provided by operations | 71,456 | 64,359 | 11.0 | |
| Per share (diluted)(2) | 0.59 | 0.53 | 11.3 | |
| Net earnings | 34,468 | 15,989 | 115.6 | |
| Per share (basic / diluted)(2) | 0.29 | 0.13 | 123.1 | |
| Adjusted net earnings(1) | 42,698 | 21,799 | 95.9 | |
| Per share (diluted)(2) | 0.35 | 0.18 | 94.4 | |
| Adjusted net earnings | ||||
| before refinancing costs(1) | 42,698 | 21,799 | 95.9 | |
| Per share (diluted)(2) | 0.35 | 0.18 | 94.4 | |
| Capital expenditures net of dispositions | 60,651 | 24,270 | 149.9 | |
| Total assets | 1,631,483 | 1,539,200 | 6.0 | |
| Total long-term liabilities | 665,961 | 667,616 | (0.2) | |
| Net debt(1) | 420,865 | 446,090 | (5.7) | |
| Dividends declared | 6,043 | 6,043 | - | |
| Shares outstanding - basic | ||||
| (weighted average)(2) | 120,859,476 | 120,843,839 | - | |
| Shares outstanding - diluted | ||||
| (weighted average)(2) | 120,882,495 | 121,071,858 | (0.2) | |
| (1) | Readers are cautioned that gross margin, gross margin percentage, gross margin - net percentage, EBITDA, Adjusted EBITDA, Adjusted net earnings, Adjusted net earnings before refinancing costs, and net debt and the related per share information do not have standardized meanings prescribed by IFRS - see "Non- GAAP Measures". |
| (2) | Basic shares include the weighted average number of shares outstanding over the period. Diluted shares include the weighted average number of shares outstanding over the period and the dilutive impact, if any, the number of shares issuable pursuant to the Incentive Option Plan. |
| (3) | Revenue and gross margin percentage have been recalculated in the prior year based on changes in presentation - see "Change in Presentation". |
| OPERATING HIGHLIGHTS | ||||
| Three months ended March 31, | ||||
| 2012 | 2011 | % Change | ||
| Land Drilling Market | ||||
| Operating days(1,2) | ||||
| Canada | 4,107 | 4,359 | (5.8) | |
| United States and International | 5,262 | 5,088 | 3.4 | |
| Rate per operating day(1,3,4) | ||||
| Canada (CDN$) | 24,206 | 20,459 | 18.3 | |
| United States and International (CDN$) | 21,935 | 17,815 | 23.1 | |
| United States and International (US$) | 21,698 | 17,878 | 21.4 | |
| Utilization rate - operating day(1,5) | ||||
| Canada | 84% | 87% | (3.4) | |
| United States and International | 90% | 90% | - | |
| Number of drilling rigs at quarter end | ||||
| Canada | 54 | 55 | (1.8) | |
| United States and International | 66 | 63 | 4.8 | |
| Utilization rate for service rigs(6) | - | 66% | - | |
| Number of service rigs at quarter end(6) | - | 22 | - | |
| Number of coring and surface casing rigs at quarter end | 20 | 20 | - | |
| Barge Drilling Market | ||||
| Operating days(1,2) | 364 | 445 | (18.2) | |
| Rate per operating day (CDN$)(1,3,4) | 25,448 | 22,004 | 15.7 | |
| Rate per operating day (US$)(1,3,4) | 25,204 | 22,083 | 14.1 | |
| Utilization rate - operating day(1,5) | 80% | 99% | (19.2) | |
| Number of barge drilling rigs at quarter end | 2 | 2 | - | |
| Number of barge drilling rigs under | - | |||
| Bareboat Charter Agreements at quarter end | 3 | 3 | - | |
| (1) | Operating days, utilization rate - operating day and rate per operating day have been recalculated, see "Change in Presentation". |
| (2) | Operating days include drill days and move days. |
| (3) | Rate per operating day includes operating revenue divided by operating days. |
| (4) | Operating revenue is presented net of third party costs |
| (5) | Utilization rate - operating day is based on operating days divided by total days available. |
| (6) | In the second quarter of 2011, Trinidad disposed of its 22 well servicing rigs and related equipment. |
OVERVIEW
The first quarter of 2012 was a very strong quarter for Trinidad. High demand for top performing equipment drove increased dayrates across the Company's fleet and revenue and EBITDA generation reached record levels. Net earnings also grew substantially in the quarter, making this quarter one of Trinidad's most profitable to date.
During the first quarter of 2012, natural gas prices continued to weaken and the industry saw a heightened pace in the transition away from dry natural gas drilling towards oil or liquids-rich plays. In the US, the average active rig count drilling natural gas weIls in the quarter lowered by more than 150 rigs compared to the previous quarter and has since continued to drop. In contrast, the total active rig count in the US has remained relatively unchanged over the same period as most rigs are moved into oil or liquids-rich plays. Natural gas in storage remains well above the levels recorded last year and the five year average and is keeping downward pressure on natural gas prices. In the first quarter of 2012, Henry Hub natural gas prices averaged $2.44 per mmBtu, down from $4.18 per mmBtu in the first quarter of last year and $3.33 per mmBtu in the previous quarter. In the first quarter, 68.0% of wells drilled in the US and 73.0% in Canada were targeting oil, compared to approximately 20.0% to 30.0% at the end of 2007. Trinidad has participated in this trend and in the first quarter had approximately 85.0% of its fleet drilling for oil or liquids-rich gas, up from a similar 20.0% to 30.0% a few years ago.
Industry utilization levels in Canada were slightly lower than the same quarter last year during the first three months of 2012 due to warmer weather conditions and an early onset of spring break up. Trinidad's Canadian operations were impacted by these conditions and although drilling day utilization was slightly lower than the same quarter last year, the Company exceeded industry average drilling day utilization levels by 18.5%. The industry average active rig count in the US was up 255 rigs or 15.2% from the same time last year as market conditions improved year over year. The rate of increase in the active rig count has leveled out in the past few quarters as weak natural gas prices have impacted overall activity levels. Trinidad's US and international operations were partly impacted in the quarter by temporary logistical delays related to rigs moving from dry natural gas plays into oil and liquids-rich plays.
Strong increases in dayrates in both of Trinidad's operating divisions drove record revenue generation of $255.6 million in the first quarter of 2012. In addition, ongoing cost control measures and lower general and administrative expenses drove an increase in Adjusted EBITDA to $92.0 million. Net earnings also increased, reaching $34.5 million or $0.29 per share (diluted) in the first quarter, as a result of lower share-based payments, depreciation and amortization expense and finance costs, slightly offset by an impairment of property and equipment incurred in the quarter.
In the past 12 months, Trinidad has increased its contract base, taking the opportunity when demand was strong to lock up rigs under long-term, take-or-pay contracts. The Company currently has more than 65.0% of its fleet under this style of contract compared to approximately 50.0% at this time last year. On average Trinidad has approximately two years term remaining on these contracts.
Trinidad continues to be focused on maintaining a sustainable growth program. The 2012 rig build program remains unchanged with five new rigs expected to be delivered into operations during the year. In addition, the Company will deliver two new rigs and four upgraded rigs from its 2011 program; four rigs from this program were delivered in the first quarter of 2012. In addition, Trinidad continues to be committed to its leverage reduction strategy and made further steps to reaching its targets in the quarter. Total debt levels were reduced by $7.3 million in the quarter, while the Company's Total Debt to EBITDA ratio lowered to 2.18 times, compared to 2.42 times at the end of 2011 and 2.83 times at the end of the first quarter of 2011.
Trinidad recorded strong operational and financial results in the first quarter of 2012. Growing dayrates and strong profitability reflected the ongoing demand for the Company's high quality equipment. During the quarter, the Company was able to demonstrate the adaptability of its equipment to work in several different plays, increasing its presence in key plays such as the Niobrara, Eagle Ford, Permian, and the Mississippian Limestone while continuing to focus on strategically managing its business in today's dynamic environment.
First quarter 2012 highlights
- Trinidad generated record revenue of $255.6 million in the first quarter of 2012, up 13.9% from the same quarter last year as a result of strong dayrates in both the Canadian and the US and international operations.
- Gross margin grew to $104.2 million in the quarter, up 23.0% from the first quarter of 2011 largely due to higher revenue levels and an ongoing focus on cost control. Gross margin - net percentage averaged 44.3% in the first quarter, compared to 41.4% in the prior comparative quarter.
- Adjusted EBITDA was $92.0 million in the quarter, an increase of 32.1% from the same quarter last year as a result of higher gross margin levels and lower general and administrative expenses.
- Net earnings for the first quarter totalled $34.5 million or $0.29 per share (diluted) compared to $7.2 million or $0.13 per share (diluted) in the same quarter in 2011. In addition to higher Adjusted EBITDA, net earnings were positively impacted by lower share-based payments, depreciation and amortization expenses and finance costs, slightly offset by an impairment of property and equipment incurred in the quarter.
- In the first quarter of 2012, Total Debt to EBITDA decreased to 2.18 times, compared to 2.42 times at year-end 2011 and 2.83 times at the end of the first quarter of 2011, a direct result of Trinidad's ongoing commitment to continue reducing indebtedness moving forward.
RESULTS FROM OPERATIONS
| Canadian Operations | ||||
| Three months ended March 31, | ||||
| ($ thousands except percentage and operating data) | 2012 | 2011 | % Change | |
| Operating revenue(1, 2, 3,4) | 114,966 | 108,862 | 5.6 | |
| Other revenue | 126 | 205 | (38.5) | |
| 115,092 | 109,067 | 5.5 | ||
| Operating costs(1, 2, 3,4) | 63,387 | 61,359 | 3.3 | |
| Gross margin | 51,705 | 47,708 | 8.4 | |
| Gross margin - net percentage | 44.9% | 43.7% | ||
| Drilling days | 3,784 | 4,008 | (5.6) | |
| Operating days(1,5) | 4,107 | 4,359 | (5.8) | |
| Rate per operating day (CDN$)(1,6) | 24,206 | 20,459 | 18.3 | |
| Utilization rate - operating day(1,7) | 84% | 87% | (3.4) | |
| Utilization rate - drilling day(1,8) | 77% | 80% | (3.8) | |
| CAODC industry average(1,9) | 65% | 66% | (1.5) | |
| Number of drilling rigs at quarter end | 54 | 55 | (1.8) | |
| Utilization rate for service rigs(1,10) | - | 66% | - | |
| Number of service rigs at quarter end(1,10) | - | 22 | - | |
| Number of coring and surface rigs at quarter end | 20 | 20 | - | |
| (1) | Operating revenue, operating costs, operating days, utilization rate - operating day and rate per operating day have been recalculated, see "Change in Presentation". |
| (2) | Inter-segment revenue and operating costs of $7.3 million for 2012, and $13.1 million for 2011, related to rig construction for the US operations has been excluded. |
| (3) | External construction revenue and operating costs of less than $0.1 million for 2012, and $0.8 million for 2011, are included in the above table. |
| (4) | Operating revenue and operating costs exclude third party recovery and third party costs of $15.2 million for 2012 and $15.5 million for 2011. |
| (5) | Operating days include drill days and move days. |
| (6) | Rate per operating day includes operating revenue divided by operating days. |
| (7) | Utilization rate - operating day is based on operating days divided by total days available. |
| (8) | Utilization rate - drilling day is based on drilling days divided by total days available. |
| (9) | CAODC industry average is based on drilling days divided by total days available. |
| (10) | In the second quarter of 2011, Trinidad disposed of all of its 22 well servicing rigs and related equipment. |
Canadian operations performed strongly in the first quarter of 2012. Dayrates increased by $3,747 per day or 18.3% compared to the same quarter last year, reflecting strong demand for equipment through the winter drilling season and labour increases that were passed on to operators.
Activity levels dropped slightly from the first quarter in 2011 as a result of warmer weather and an early onset of spring break up. Despite the marginally lower activity level in the quarter, the Canadian operations continued to achieve drilling day utilization levels well in excess of the industry average and reached 100.0% utilization for a period of time during the quarter. During the first quarter of 2012, Trinidad recorded average drilling day utilization of 77.0%, compared to an industry average of 65.0% and 80.0% in the same quarter last year. In addition, operating days were lower in the quarter due to the transfer of one rig from the Company's Canadian operations to the US in the second quarter of 2011.
Higher dayrates in the quarter more than offset the impact of lower operating days and the Canadian operations recorded revenue of $115.1 million, up 5.5% from the same quarter last year. Gross margin and gross margin - net percentage also increased reflecting the higher dayrates and an ongoing focus on cost control throughout the quarter. Gross margin in the first quarter was lowered by the absence of Trinidad's well servicing division which was sold in the second quarter of 2011.
Due to frozen ground conditions for a large part of the first three months of the year, the first quarter is typically the coring division's most active period. During the first quarter of 2012, Trinidad's coring division was busier than expected as a result of high crude oil prices and strong customer demand. The division had more equipment working in the quarter compared to the same period last year and revenue generation increased to reflect these improved conditions.
In 2012, the construction division focused solely on its internal rig build program, while in the same period of the prior year the division was still completing work for external customers. In the quarter, the division completed construction of two new builds for the Canadian operations. In addition they continued to work on two new builds, with expected delivery in mid-2012. In the first quarter of 2011, the construction division completed and put into service one rig for the US operations and continued construction of an additional four rigs.
| United States and International Operations | ||||||
| Three months ended March 31, | ||||||
| ($ thousands except percentage and operating data) | 2012 | 2011 | % Change | |||
| Operating revenue(1,2) | 120,096 | 95,495 | 25.8 | |||
| Other revenue | 4 | 136 | (97.1) | |||
| 120,100 | 95,631 | 25.6 | ||||
| Operating costs(1,2) | 67,612 | 58,610 | 15.4 | |||
| Gross margin | 52,488 | 37,021 | 41.8 | |||
| Gross margin - net percentage | 43.7% | 38.7% | ||||
| Land Drilling Rigs | ||||||
| Drilling days | 4,579 | 4,539 | 0.9 | |||
| Operating days(1,3) | 5,262 | 5,088 | 3.4 | |||
| Rate per operating day (CDN$)(1,4) | 21,935 | 17,815 | 23.1 | |||
| Rate per operating day (US$)(1,4) | 21,698 | 17,878 | 21.4 | |||
| Utilization rate - operating day(1,5) | 90% | 90% | - | |||
| Utilization rate - drilling day(1,6) | 78% | 80% | (2.5) | |||
| Number of drilling rigs at quarter end | 66 | 63 | 4.8 | |||
| Barge Drilling Rigs | ||||||
| Operating days(3) | 364 | 445 | (18.2) | |||
| Rate per operating day (CDN$)(1,4) | 25,448 | 22,004 | 15.7 | |||
| Rate per operating day (US$)(1,4) | 25,204 | 22,083 | 14.1 | |||
| Utilization rate - operating day(1,5) | 80% | 99% | (19.2) | |||
| Number of barge drilling rigs at quarter end | 2 | 2 | - | |||
| Number of barge drilling rigs under | ||||||
| Bareboat Charter Agreements at quarter end | 3 | 3 | - | |||
| (1) | Operating revenue, operating costs, operating days, utilization rate - operating day and rate per operating day have been recalculated, see "Change in Presentation". |
| (2) | Operating revenue and operating costs exclude third party recovery and third party costs of $5.2 million for 2012 and $4.1 million for 2011. |
| (3) | Operating days include drill days and move days. |
| (4) | Rate per operating day includes operating revenue divided by operating days. |
| (5) | Utilization rate - operating day is based on operating days divided by total days available. |
| (6) | Utilization rate - drilling day is based on drilling days divided by total days available. |
Industry conditions remained strong in Trinidad's US and international operations for the first three months of the year. The ongoing weakness in natural gas prices led to a higher than usual number of moving days in the quarter as rigs were redeployed from dry natural gas plays to oil or liquids-rich plays. In addition, Trinidad received income from rigs that were idle-but-contracted during the quarter as operators reviewed their options to move rigs out of dry natural gas plays.
Strong demand for Trinidad's modern, high performance equipment led to upward momentum on dayrates in the quarter. Over the past year, as contracts have renewed or new rigs have been put into operation, dayrates have generally been at higher levels. In the first quarter of 2012, rates per operating day increased US$3,820 per day from the same quarter last year and US$1,311 per day sequentially. Excluding the impact of income from idle-but-contracted rigs, rates per operating day increased to US$20,935 per day, from US$17,753 per day in the same quarter last year and US$20,342 in the previous quarter. In addition to these factors, dayrates increased as a result of higher labour costs that were passed through to the operator.
Higher dayrates in the quarter drove the segment to record an increase of 25.6% in revenue generation compared to the same quarter last year. Gross margin and gross margin - net percentage also increased in the first quarter as revenue improvements outpaced operating cost increases. The segment benefited from lower repairs and maintenance expenses compared to the same quarter last year when rig reactivation costs were incurred as its more conventional style assets were put back to work. Gross margin and gross margin - net percentage decreased slightly compared to the previous quarter largely as a result of the higher number of moving days in the current quarter and increased labour expenses that are passed through to the operator at cost. Strong demand for services, such as trucking and moving equipment, in relocation areas caused some logistical challenges and delays in the redeployment of equipment during the quarter. Trinidad anticipates that the impact of these logistical issues will not impact future quarters.
Trinidad's US and international rig count increased by a net three rigs compared to the first quarter of 2011. During this time, the Company added three rigs into the Niobrara shale in Wyoming, one rig was transferred from its Canadian operations and two were acquired in 2011 and subsequently refurbished before being delivered in the current quarter. In addition, the Company delivered two new builds into its Eagle Ford shale operations in 2011. This five rig increase was offset by the removal of two rigs from Trinidad's marketed fleet in the US at the end of 2011. These rigs are being assessed for sale or possible retrofit, to meet current customer demands and Trinidad's target fleet mix.
The Company's barge drilling rigs also saw an increase in dayrates in the quarter compared to the same quarter last year, reflecting the increased level of demand and the limited supply of high quality equipment in this sector. Activity levels in the quarter decreased compared to the same period last year as a result of downtime between well locations. All rigs are currently operating and the Company expects utilization levels to return to their previous levels moving forward.
QUARTERLY ANALYSIS
| FINANCIAL HIGHLIGHTS - QUARTERLY ANALYSIS | |||||||||
| 2012 | 2011 | 2010 | |||||||
| ($ millions except per share data and operating data) | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Revenue | 255.6 | 226.5 | 196.8 | 149.7 | 224.3 | 194.4 | 167.4 | 134.2 | |
| Gross margin | 104.2 | 88.8 | 81.5 | 52.6 | 84.7 | 76.7 | 62.5 | 47.9 | |
| Gross margin percentage | 40.8% | 39.2% | 41.4% | 35.2% | 37.8% | 39.4% | 37.3% | 35.7% | |
| Gross margin - net percentage | 44.3% | 42.4% | 44.3% | 37.8% | 41.4% | 43.0% | 39.7% | 37.8% | |
| Net earnings (loss) for the year | 34.5 | 25.3 | 30.2 | 5.0 | 16.0 | (84.8) | 0.8 | 10.0 | |
| Adjustments for: | |||||||||
| Depreciation and amortization | 28.1 | 29.1 | 28.6 | 25.4 | 29.6 | 27.7 | 28.6 | 23.9 | |
| Foreign exchange | 0.5 | 2.4 | (6.1) | (1.2) | 1.8 | 0.5 | 5.1 | (5.9) | |
| Loss (gain) on sale of property and equipment | 0.2 | (0.6) | (0.1) | (5.3) | - | 0.4 | - | (4.0) | |
| Impairment of property and equipment | 7.5 | - | - | 9.0 | - | 24.9 | - | - | |
| Impairment of intangible assets and goodwill | - | - | - | - | - | 59.1 | 0.3 | - | |
| Finance costs | 10.8 | 10.9 | 10.9 | 10.5 | 12.4 | 36.2 | 14.0 | 14.2 | |
| Income taxes | 10.2 | 4.8 | 6.4 | (3.4) | 5.9 | (2.2) | 0.4 | (3.1) | |
| Other | 0.1 | 2.5 | (0.5) | (0.9) | 4.0 | 1.7 | 0.7 | (0.4) | |
| Income taxes paid | (0.7) | - | (4.5) | (0.9) | (2.4) | (0.4) | (1.9) | (2.9) | |
| Income taxes recovered | - | 0.8 | 1.5 | - | 0.2 | - | - | - | |
| Interest paid | (19.8) | (1.6) | (21.4) | (3.3) | (3.1) | (25.7) | (2.6) | (15.6) | |
| Interest received | - | - | - | - | - | - | - | 0.1 | |
| Funds provided by operations | 71.4 | 73.6 | 45.0 | 34.9 | 64.4 | 37.4 | 45.4 | 16.3 | |
| Net earnings (loss) per share (diluted) | 0.29 | 0.21 | 0.25 | 0.04 | 0.13 | (0.70) | 0.01 | 0.08 | |
| Funds provided by operations per share (diluted) | 0.59 | 0.61 | 0.37 | 0.29 | 0.53 | 0.31 | 0.38 | 0.13 | |
NON-GAAP MEASURES HIGHLIGHTS - QUARTERLY ANALYSIS
| 2012 | 2011 | 2010 | |||||||
| ($ millions except per share data and operating data) | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| EBITDA(1) | 91.2 | 69.5 | 76.0 | 41.2 | 63.8 | 61.5 | 44.1 | 40.9 | |
| Per share (diluted)(2) | 0.75 | 0.58 | 0.63 | 0.34 | 0.53 | 0.51 | 0.37 | 0.34 | |
| Adjusted EBITDA(1) | 92.0 | 74.4 | 69.4 | 39.1 | 69.6 | 63.7 | 49.9 | 34.7 | |
| Per share (diluted)(2) | 0.76 | 0.62 | 0.57 | 0.32 | 0.58 | 0.53 | 0.41 | 0.29 | |
| Adjusted net earnings(1) | 42.7 | 30.2 | 23.5 | 11.9 | 21.8 | 1.5 | 6.9 | 3.8 | |
| Per share (diluted)(2) | 0.35 | 0.25 | 0.19 | 0.10 | 0.18 | 0.01 | 0.06 | 0.03 | |
| Adjusted net earnings | |||||||||
| before refinancing costs(1) | 42.7 | 30.2 | 23.5 | 11.9 | 21.8 | 21.1 | 6.9 | 3.8 | |
| Per share (diluted)(2) | 0.35 | 0.25 | 0.19 | 0.10 | 0.18 | 0.17 | 0.06 | 0.03 | |
| (1) | See the Non-GAAP Measures Definitions section of this document for further details. |
| (2) | Diluted shares include the weighted average number of shares outstanding over the period and the dilutive impact, if any, the number of shares issuable pursuant to the Incentive Option Plan. |
OPERATING HIGHLIGHTS - QUARTERLY ANALYSIS
| 2012 | 2011 | 2010 | |||||||
| ($ millions except per share data and operating data) | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Land Drilling Market | |||||||||
| Operating days(1,2) | |||||||||
| Canada | 4,107 | 3,665 | 3,675 | 1,646 | 4,359 | 3,522 | 2,971 | 1,728 | |
| United States and International | 5,262 | 5,547 | 5,579 | 5,170 | 5,088 | 4,958 | 4,769 | 4,281 | |
| Rate per operating day(1,3,4) | |||||||||
| Canada (CDN$) | 24,206 | 23,652 | 20,315 | 20,796 | 20,459 | 20,163 | 18,751 | 20,988 | |
| United States and International (CDN$) | 21,935 | 20,710 | 18,600 | 18,470 | 17,815 | 18,172 | 18,414 | 17,065 | |
| United States and International (US$) | 21,698 | 20,387 | 19,143 | 19,095 | 17,878 | 17,789 | 17,681 | 16,684 | |
| Utilization rate - operating day(1,5) | |||||||||
| Canada | 84% | 74% | 74% | 34% | 87% | 70% | 60% | 36% | |
| United States and International | 90% | 92% | 92% | 89% | 90% | 82% | 78% | 71% | |
| Number of drilling rigs at quarter end | |||||||||
| Canada | 54 | 54 | 54 | 54 | 55 | 55 | 55 | 53 | |
| United States and International | 66 | 64 | 66 | 65 | 63 | 62 | 66 | 67 | |
| Utilization rate for service rigs(6) | - | - | - | 34% | 66% | 57% | 41% | 37% | |
| Number of service rigs at quarter end(6) | - | - | - | - | 22 | 22 | 22 | 22 | |
| Number of coring and surface casing | |||||||||
| rigs at quarter end | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | |
| Barge Drilling Market | |||||||||
| Operating days(1,2) | 364 | 373 | 454 | 436 | 445 | 456 | 368 | 283 | |
| Rate per operating day (CDN$)(1,3,4) | 25,448 | 25,835 | 24,833 | 22,680 | 22,004 | 24,368 | 24,556 | 25,951 | |
| Rate per operating day (US$)(1,3,4) | 25,204 | 25,455 | 25,547 | 23,441 | 22,083 | 23,844 | 23,581 | 25,332 | |
| Utilization rate - operating day(1,5) | 80% | 81% | 99% | 96% | 99% | 99% | 88% | 78% | |
| Number of barge drilling rigs at quarter end | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 1 | |
| Number of barge drilling rigs under | |||||||||
| Bareboat Charter at quarter end | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | |
| (1) | Operating revenue, operating costs, operating days, utilization rate - operating day and rate per operating day have been recalculated, see "Change in Presentation". |
| (2) | Operating days include drill days and move days. |
| (3) | Rate per operating day includes operating revenue divided by operating days. |
| (4) | Operating revenue is presented net of third party costs |
| (5) | Utilization rate - operating day is based on operating days divided by total days available. |
| (6) | In the second quarter of 2011, Trinidad disposed of its 22 well servicing rigs and related equipment. |
FINANCIAL SUMMARY
| As at | March 31, | December 31, | ||
| ($ thousands except percentage data) | 2012 | 2011 | ||
| Working capital(1) | 151,935 | 139,829 | ||
| Current portion of long-term debt | 600 | 580 | ||
| Long-term debt(2) | 572,800 | 580,167 | ||
| Total debt | 573,400 | 580,747 | ||
| Total debt as a percentage of assets | 35.1% | 36.1% | ||
| Net debt(1) | 420,865 | 440,338 | ||
| Net debt as a percentage of assets | 25.8% | 27.4% | ||
| Total assets | 1,631,483 | 1,608,126 | ||
| Total long-term liabilities | 768,528 | 766,900 | ||
| Total long-term liabilities as a percentage of assets | 47.1% | 47.7% | ||
| Shareholders' equity | 862,955 | 841,226 | ||
| Total debt to shareholders' equity | 66.4% | 69.0% | ||
| Net debt to shareholders' equity | 48.8% | 52.3% | ||
| (1) | See Non-GAAP Measures Definition section of this document for further details. |
| (2) | Long-term debt is net of associated transaction costs. |
At March 31, 2012, working capital increased by $12.1 million from December 31, 2011. Higher activity levels resulted in an increase in accounts receivable, which subsequently increased working capital in the current period. The increase was partially offset by a reduction in net cash of $4.8 million in the current period, as the Company continued to utilize its bank overdraft versus carrying cash in the prior year.
Trinidad's total debt declined by $7.3 million during the current quarter, due to the decline in fair value of the Senior Notes of US$450.0 million, as a result of the strengthened Canadian dollar versus the US dollar ending foreign exchange rate at March 31, 2012. The Senior Notes are translated at each quarter end, as such their value will fluctuate quarterly with variations in exchange rates. The Senior Notes are due January 2019 and interest is payable semi-annually in arrears on January 15 and July 15.
Trinidad's net debt declined by $23.3 million during the current quarter, due to a slightly lower debt balance combined with a higher working capital for reasons as mentioned above.
At March 31, 2012, Trinidad had CDN$82.0 million outstanding on its Canadian revolving credit facility and US$52.0 million on its US revolving credit facility, leaving CDN$118.0 million and US$48.0 million unutilized in the facility, respectively. The Canadian and US revolving facility requires quarterly interest payments that are based on Bankers Acceptance and LIBOR rates and incorporate a tiered interest rate, which varies depending on the results of the Consolidated Total Debt to Consolidated EBITDA ratio (see table below). In 2011 Trinidad's lenders agreed to an extension of the facility, which now matures on December 16, 2015, and is subject to annual extensions of an additional year on each anniversary.
A total of $61.8 million of capital expenditures were spent during the three months ended March 31, 2012, compared to $24.6 million for the same period in the prior year. Capital expenditures were substantially related to the Company's rig build program.
Trinidad expects cash provided by operations and the Company's various sources of financing to be sufficient to meet its debt repayments, future obligations and to fund planned capital expenditures.
Current financial performance is well in excess of the financial ratio covenants under the revolving credit facility as reflected in the table below under IFRS:
| RATIO | March 31, | December 31, | THRESHOLD | ||
| 2012 | 2011 | ||||
| Consolidated Senior Debt to Consolidated EBITDA(1) | 0.53:1 | 0.59:1 | 3.00:1 maximum | ||
| Consolidated Total Debt to Consolidated EBITDA(1) | 2.18:1 | 2.42:1 | 4.00:1 maximum | ||
| Consolidated EBITDA to Consolidated Cash Interest Expense(1) | 6.52:1 | 5.74:1 | 2.75:1 minimum | ||
| (1) | Please see the Non-GAAP Measures Definition section of this document for further details. |
Readers are cautioned that the ratios noted above do not have standardized meanings prescribed in IFRS.
OUTLOOK
Despite the high natural gas storage levels which have led to downward price pressure for natural gas, drilling industry fundamentals have remained strong to date in 2012. Trinidad has demonstrated an ability to switch its focus away from dry natural gas development towards oil and liquids-rich plays. As rigs have been moved from dry natural gas projects they have largely been absorbed by ongoing demand in oil or liquids-rich plays. The strength in crude oil prices and the high level of demand for equipment has to date maintained dayrates at relatively strong levels, particularly for high performance equipment.
An important part of Trinidad's strategy is to maintain a significant portion of its fleet under long-term, take-or-pay contract as a way to mitigate some of the impact of the cyclicality of its business. The Company took advantage of the strong conditions and increasing dayrates present in the past year and has increased its contract coverage to cover more than 65.0% of its fleet. While Trinidad does not believe that a downturn in drilling activity is imminent, it believes that it is prudent to protect a large portion of its revenue stream, allowing the Company more certainty in its planning for the remainder of 2012 and into 2013.
Trinidad's outlook for 2012 remains positive. Crude oil prices are at a level that generates strong activity levels and rigs have moved smoothly from dry gas drilling to oil and liquids-rich targets. Trinidad expects that modern, high performance equipment will continue to be the equipment of choice by operators and that demand and pricing will remain strong in this sector of the market. If natural gas prices remain weak moving forward and the level of available rigs increases, the Company anticipates that operators may begin to high grade equipment, selecting more efficient technically advanced equipment for their development projects. With three quarters of its fleet fitting into this category, and a strong contract base, Trinidad expects that 2012 will be another strong year.
Moving forward in 2012 and beyond Trinidad will continue to work towards its goals of lower leverage and sustainable growth. In the short-term Trinidad expects to lower its Total Debt to EBITDA levels below 2.0 times, with a long-term goal of maintaining its leverage either side of 1.5 times, depending on market conditions. Trinidad's 2012 capital program remains unchanged at $110 to $120 million and includes five new builds to be built in 2012 and the delivery of six rigs from the Company's 2011 construction and rig upgrade program. Trinidad has shown a disciplined approach to capital spending and a commitment to reaching its leverage goals for a number of years and a clear path to achieving its targets in the near future is now visible. In addition, Trinidad has shown its commitment to providing a yield as part of its shareholders' total return. The Company has kept its dividend in place for the past ten years, throughout industry cycles and the challenging economic times experienced during the past few years. Trinidad will continue to carefully balance its growth program with its debt reduction strategy while also reviewing alternative ways of adding value for shareholders.
Trinidad expects that current industry conditions are indicative of the remainder of 2012. Dayrates and activity levels remain strong but the high level of growth experienced in 2011 has leveled out, leaving a solid cash flow generating ability for the Company. These conditions and the Company's improving financial flexibility position it well for success in 2012 and into the future.
CONFERENCE CALL
A conference call and webcast to discuss the results will be held for the investment community on Wednesday May 9th, 2012 beginning at 8:00 a.m. MT (10:00 a.m. ET). Please note that this conference call is earlier than Trinidad's typical quarterly timing. To participate, please dial (888) 231-8191 (toll-free in North America) or (647) 427-7450 approximately 10 minutes prior to the conference call. An archived recording of the call will be available from approximately 1:00 p.m. ET on May 9th, 2012 until midnight May 16th, 2012 by dialing (855) 859 2056 or (416) 849-0833 and entering replay access code 72045719.
A live audio webcast of the conference call will also be available via the Investor Relations page of Trinidad's website at www.trinidaddrilling.com
A full copy of Trinidad's first quarter 2012 report including Management's Discussion and Analysis, Consolidated Financial Statements and Notes to the Consolidated Financial Statements can be found on the Investor Relations page of Trinidad's website or at www.sedar.com
TRINIDAD DRILLING LTD.
Trinidad is a corporation focused on sustainable growth that trades on the Toronto Stock Exchange under the symbol TDG. Trinidad's divisions operate in the drilling, coring 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.
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||
| As at | March 31, | December 31, | |
| ($ thousands) - unaudited | 2012 | 2011 | |
| Assets | |||
| Current Assets | |||
| Cash and cash equivalents | - | - | |
| Accounts receivable | 222,951 | 207,143 | |
| Inventory | 16,166 | 17,523 | |
| Prepaid expenses | 4,189 | 6,298 | |
| Assets held for sale | 11,196 | 9,048 | |
| 254,502 | 240,012 | ||
| Property and equipment | 1,290,418 | 1,279,826 | |
| Intangible assets and goodwill | 86,563 | 88,288 | |
| 1,631,483 | 1,608,126 | ||
| Liabilities | |||
| Current Liabilities | |||
| Bank indebtedness | 9,412 | 4,600 | |
| Accounts payable and accrued liabilities | 86,205 | 88,960 | |
| Dividends payable | 6,043 | 6,043 | |
| Deferred revenue | 307 | - | |
| Current portion of long-term debt | 600 | 580 | |
| 102,567 | 100,183 | ||
| Long-term debt | 572,800 | 580,167 | |
| Deferred income taxes | 93,161 | 86,550 | |
| 768,528 | 766,900 | ||
| Shareholders' Equity | |||
| Common shares | 952,043 | 952,043 | |
| Contributed surplus | 49,547 | 49,462 | |
| Accumulated other comprehensive (loss) | (32,158) | (25,377) | |
| Retained earnings (deficit) | (106,477) | (134,902) | |
| 862,955 | 841,226 | ||
| 1,631,483 | 1,608,126 | ||
| Commitments and contingencies |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||
| Three months ended March 31, | |||||
| ($ thousands except per share data) - unaudited | 2012 | 2011 | |||
| Revenue | |||||
| Oilfield service revenue | 255,450 | 223,977 | |||
| Other revenue | 130 | 341 | |||
| 255,580 | 224,318 | ||||
| Expenses | |||||
| Operating expense | 151,387 | 139,589 | |||
| General and administrative | 12,337 | 19,159 | |||
| Depreciation and amortization | 28,130 | 29,575 | |||
| Foreign exchange | 616 | 1,757 | |||
| Loss (gain) on sale of property and equipment | 170 | (11) | |||
| Impairment of property and equipment | 7,519 | - | |||
| 200,159 | 190,069 | ||||
| Finance costs | 10,802 | 12,381 | |||
| Earnings before income taxes | 44,619 | 21,868 | |||
| Income taxes | |||||
| Current | (55) | 725 | |||
| Deferred | 10,206 | 5,154 | |||
| 10,151 | 5,879 | ||||
| Net earnings | 34,468 | 15,989 | |||
| Other comprehensive income (loss) | |||||
| Foreign currency translation adjustment, net of | |||||
| income tax | (6,781) | (8,795) | |||
| (6,781) | (8,795) | ||||
| Total comprehensive income | 27,687 | 7,194 | |||
| Earnings per share | |||||
| Net earnings | |||||
| Basic | 0.29 | 0.13 | |||
| Diluted | 0.29 | 0.13 | |||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||||||
| For three months ended March 31, 2012 and 2011 | |||||||
| Accumulated | |||||||
| other | Retained | ||||||
| Common | Contributed | comprehensive | earnings | Total | |||
| ($ thousands) - unaudited | Notes | shares | surplus | income (loss)(1) | (deficit) | equity | |
| Balance at December 31, 2011 | 952,043 | 49,462 | (25,377) | (134,902) | 841,226 | ||
| Share-based payments | - | 85 | - | - | 85 | ||
| Total comprehensive income (loss) | - | - | (6,781) | 34,468 | 27,687 | ||
| Dividends | - | - | - | (6,043) | (6,043) | ||
| Balance at March 31, 2012 | 952,043 | 49,547 | (32,158) | (106,477) | 862,955 | ||
| Balance at January 1, 2011 | 951,863 | 49,016 | (30,030) | (187,211) | 783,638 | ||
| Exercise of stock options | 163 | (44) | - | - | 119 | ||
| Share-based payments | - | 325 | - | - | 325 | ||
| Total comprehensive income (loss) | - | - | (8,795) | 15,989 | 7,194 | ||
| Dividends | - | - | - | (6,043) | (6,043) | ||
| Balance at March 31, 2011 | 952,026 | 49,297 | (38,825) | (177,265) | 785,233 | ||
| (1) | Accumulated other comprehensive income consisted of foreign currency translation adjustment. |
(See Notes to the Consolidated Interim Financial Statements)
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| For three months ended March 31, | ||
| ($ thousands) - unaudited | 2012 | 2011 |
| Cash provided by (used in) | ||
| Operating activities | ||
| Net earnings | 34,468 | 15,989 |
| Adjustments for: | ||
| Depreciation and amortization | 28,130 | 29,575 |
| Foreign exchange | 616 | 1,757 |
| Loss (gain) on sale of property and equipment | 170 | (11) |
| Impairment of property and equipment | 7,519 | - |
| Finance costs | 10,802 | 12,381 |
| Income taxes | 10,151 | 5,879 |
| Other | 91 | 4,012 |
| Income taxes paid | (702) | (2,439) |
| Income taxes recovered | - | 247 |
| Interest paid | (19,793) | (3,072) |
| Interest received | 4 | 41 |
| Funds provided by operations | 71,456 | 64,359 |
| Change in non-cash operating working capital | (3,989) | (40,099) |
| Cash provided by operations | 67,467 | 24,260 |
| Investing activities | ||
| Purchase of property and equipment | (61,805) | (24,552) |
| Proceeds from disposition of property and equipment | 1,154 | 282 |
| Change in non-cash working capital | (7,146) | 4,241 |
| Cash used by investing | (67,797) | (20,029) |
| Financing activities | ||
| Proceeds from long-term debt | 20,000 | 16,000 |
| Repayments of long-term debt | (18,137) | (16,141) |
| Proceeds from exercise of options | - | 119 |
| Dividends paid | (6,043) | (6,042) |
| Financing costs | - | (1,178) |
| Cash used by financing | (4,180) | (7,242) |
| Cash flow from operating, investing and financing activities | (4,510) | (3,011) |
| Effect of translation of foreign currency cash | (302) | 256 |
| Decrease in cash for the period | (4,812) | (2,755) |
| Cash and cash equivalents (bank indebtedness) - beginning of period | (4,600) | 7,905 |
| Bank indebtedness - end of period | (9,412) | 5,150 |
SEGMENTED INFORMATION
| For Three months ended | United States / | Inter- | |||
| March 31, 2012 | Canadian | International | segment | ||
| ($ thousands) | Operations | Operations | Eliminations | Corporate | Total |
| Operating revenue | 114,966 | 120,096 | - | - | 235,062 |
| Other revenue | 126 | 4 | - | - | 130 |
| Third party recovery | 15,238 | 5,150 | - | - | 20,388 |
| Inter-segment revenue | 7,296 | - | (7,296) | - | - |
| 137,626 | 125,250 | (7,296) | - | 255,580 | |
| Operating costs | 63,387 | 67,612 | - | - | 130,999 |
| Third party costs | 15,238 | 5,150 | - | - | 20,388 |
| Inter-segment operating | 7,296 | - | (7,296) | - | - |
| Operating income | 51,705 | 52,488 | - | - | 104,193 |
| Depreciation and amortization | 9,362 | 18,768 | - | - | 28,130 |
| Gain on sale of property and equipment | 31 | 139 | - | - | 170 |
| Impairment of property and equipment | 5,957 | 1,562 | - | - | 7,519 |
| 15,350 | 20,469 | - | - | 35,819 | |
| Segmented income | 36,355 | 32,019 | - | - | 68,374 |
| General and administrative | - | - | - | 12,337 | 12,337 |
| Foreign exchange | - | - | - | 616 | 616 |
| Finance costs | - | - | - | 10,802 | 10,802 |
| Income taxes | - | - | - | 10,151 | 10,151 |
| Net earnings (loss) | 36,355 | 32,019 | - | (33,906) | 34,468 |
| Purchase of property and equipment | 25,232 | 36,573 | - | - | 61,805 |
| For Three months ended | United States / | Inter- | |||
| March 31, 2011 | Canadian | International | segment | ||
| ($ thousands) | Operations | Operations | Eliminations | Corporate | Total |
| Operating revenue | 108,862 | 95,495 | - | - | 204,357 |
| Other revenue | 205 | 136 | - | - | 341 |
| Third party recovery | 15,500 | 4,120 | - | - | 19,620 |
| Inter-segment revenue | 13,092 | - | (13,092) | - | - |
| 137,659 | 99,751 | (13,092) | - | 224,318 | |
| Operating costs | 61,359 | 58,610 | - | - | 119,969 |
| Third party costs | 15,500 | 4,120 | - | - | 19,620 |
| Inter-segment operating | 13,092 | - | (13,092) | - | - |
| Operating income | 47,708 | 37,021 | - | - | 84,729 |
| Depreciation and amortization | 11,231 | 18,344 | - | - | 29,575 |
| Loss (gain) on sale of property and equipment | 48 | (59) | - | - | (11) |
| 11,279 | 18,285 | - | - | 29,564 | |
| Segmented income | 36,429 | 18,736 | - | - | 55,165 |
| General and administrative | - | - | - | 19,159 | 19,159 |
| Foreign exchange | - | - | - | 1,757 | 1,757 |
| Finance costs | - | - | - | 12,381 | 12,381 |
| Income taxes | - | - | - | 5,879 | 5,879 |
| Net earnings (loss) | 36,429 | 18,736 | - | (39,176) | 15,989 |
| Purchase of property and equipment | 4,229 | 20,323 | - | - | 24,552 |
ADVISORY
CHANGE IN PRESENTATION
Trinidad has changed the presentation of third party costs and recovery to be accounted for on a gross basis versus a net basis. The presentation change will provide the users of the consolidated interim financial statements and document improved disclosure on the Company's operating segments, in addition, the presentation will more accurately reflect the legal form of the contracts. The change has resulted in a reclassification of third party rental equipment costs, which were previously netted against revenue, to be presented on a gross basis as third party recovery and third party costs. In addition, third party fuel costs, which were previously reported on a gross basis, have been reclassified to be included in third party recovery and third party costs.
In addition, the calculation of dayrates has been changed to be based on operating revenue divided by operating days (drilling plus move days), and now excludes third party recovery revenue as well as other income. Previously, only drilling days were included in the day rate calculation. Furthermore, the Company has included additional disclosure in regards to utilization, adding utilization rate - operating day which is based on operating days instead of just the previously disclosed drilling day based utilization. The change in presentation of day rates and utilization will better align our disclosure with our peers, and our management measurement tools. Furthermore, the changes will allow the users of the financial statements a higher degree of disclosure. See "Non-GAAP Measures Definitions" for calculations. The changes in presentation have been applied retroactively.
NON-GAAP MEASURES DEFINITIONS
This document contains references to certain financial measures and associated per share data that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. These financial measures are computed on a consistent basis for each reporting period and include gross margin, gross margin percentage, gross margin - net percentage, EBITDA, Adjusted EBITDA, Adjusted net earnings, Adjusted net earnings before refinancing costs, net debt, working capital, Senior Debt to EBITDA, Total Debt to EBITDA, EBITDA to Cash Interest Expense, drilling days, operating days, utilization rate - drilling day, utilization rate - operating day, and rate per operating day. These non-GAAP measures are identified and defined as follows under IFRS:
Additional information on the calculation of the above-mentioned, non-GAAP measures can be found in the Management's Discussion and Analysis section of Trinidad's full year and fourth quarter 2011 report which is available on Trinidad's website at www.trinidaddrilling.com or from SEDAR at www.sedar.com
"Gross margin" is used by management and investors to analyze overall and segmented operating performance. Gross margin is not intended to represent operating income nor should it be viewed as an alternative to net earnings or other measures of financial performance calculated in accordance with IFRS. Gross margin is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information contained in the notes to the consolidated interim financial statements and is defined as revenue less operating expenses.
"Gross margin percentage" is used by management and investors to analyze overall and segmented operating performance. Gross margin percentage is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information in the notes to the consolidated interim financial statements and is defined as gross margin divided by revenue.
"Gross margin - net percentage" is used by management and investors to analyze overall and segmented operating performance. Gross margin - net percentage is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information in the notes to the consolidated interim financial statements and is defined as gross margin divided by revenue net of third party costs.
"EBITDA" is a measure of the Company's operating profitability. EBITDA provides an indication of the results generated by the Company's principal business activities prior to how these activities are financed, assets are depreciated, amortized and impaired, or how the results are taxed in various jurisdictions.
"Adjusted EBITDA" is used by management and investors to analyze EBITDA (as defined above) prior to the effect of foreign exchange and share-based payment expense, and is not intended to represent net earnings as calculated in accordance with IFRS.
"Adjusted net earnings" is used by management and the investment community to analyze Adjusted net earnings prior to the effect of foreign exchange, share-based payments and impairment charges and is not intended to represent net earnings as calculated in accordance with IFRS.
"Adjusted net earnings before refinancing costs" is used by management to analyze Adjusted net earnings prior to the effects of refinancing costs and is not intended to represent net earnings as calculated in accordance with IFRS
"Net debt" is used by management and the investment community to analyze the amount of debt less the working capital of the Company.
"Working capital" is used by management and the investment community to analyze the operating liquidity available to the Company.
"Senior Debt to EBITDA" is defined as the consolidated balance of the revolving facility and other debt secured by a lien at quarter end to consolidated EBITDA for the trailing twelve months (TTM). Consolidated EBITDA used in this financial ratio is calculated as EBITDA plus share-based payments and unrealized foreign exchange.
"Total Debt to EBITDA" is defined as the consolidated balance of long-term debt, which includes the Senior Debt, and dividends payable at quarter end, plus the current portion of long-term debt, to consolidated EBITDA for the TTM. Consolidated EBITDA used in this financial ratio is calculated as EBITDA plus share-based payments and unrealized foreign exchange.
"EBITDA to Cash Interest Expense" is defined as the consolidated EBITDA for TTM to the cash interest expense on all debt balances for TTM. Consolidated EBITDA used in this financial ratio is calculated as EBITDA plus share-based payments and unrealized foreign exchange.
"Drilling days" is defined as rig days between spud to rig release.
"Operating days" is defined as moving days (move in, rig up and tear out) plus drilling days (spud to rig release).
"Utilization rate - drilling day" is defined as drilling days divided by total available rig days.
"Utilization rate - operating day" is defined as operating days (drilling days plus moving days) divided by total available rig days.
"Rate per operating day" is defined as operating revenue (net of third party costs) divided by operating days (drilling days plus moving days).
References to gross margin, gross margin percentage, gross margin - net percentage, EBITDA, Adjusted EBITDA, Adjusted net earnings, Adjusted net earnings before refinancing costs, net debt, working capital, Senior Debt to EBITDA, Total Debt to EBITDA, EBITDA to Cash Interest Expense, drilling days, operating days, utilization rate - drilling day, utilization rate - operating day, and rate per operating day throughout this document have the meanings set out above.
FORWARD-LOOKING STATEMENTS
The document contains certain forward-looking statements relating to Trinidad's plans, strategies, objectives, expectations and intentions. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this document. The forward-looking information and statements included in this document are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are 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 statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements. In particular, but without limiting the foregoing, this document may contain forward-looking information and statements pertaining to the completion of announced rig construction programs on a timely basis and economical terms; the assumption that Trinidad's customers will honour their take-or-pay contracts; fluctuations in the demand for Trinidad's services; the ability for Trinidad to attract and retain qualified personnel, in particular field staff to crew the Company's rigs; the existence of competitors, technological changes and developments in the oilfield services industry; the existence of operating risks inherent in the oilfield services industry; assumptions respecting capital expenditure programs and other expenditures by oil and gas exploration and production companies; assumptions regarding commodity prices, in particular oil and natural gas; assumptions respecting supply and demand for commodities, in particular oil and natural gas; assumptions regarding foreign currency exchange rates and interest rates; the existence of regulatory and legislative uncertainties; the possibility of changes in tax laws; and general economic conditions including the capital and credit markets. Trinidad cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this document speak only as of the date of this document and Trinidad assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
Lyle Whitmarsh,
Chief Executive Officer
Brent Conway
President
Lisa Ciulka
Vice President, Investor Relations
Phone: (403) 265-6525 Fax: (403) 265-4168
E-mail: [email protected]
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