Trinidad Drilling Ltd. reports solid first quarter 2013 results; stable operating margins and strong dayrates
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
TSX SYMBOL: TDG
CALGARY, May 8, 2013 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or "the Company") reported solid first quarter 2013 results with stable operating margins and strong dayrates. "Trinidad's ability to generate solid results this quarter, despite weaker industry conditions, clearly demonstrates our high quality asset base, extensive contract coverage and ability to continue to meet our customers' needs," said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "Industry conditions were weaker this quarter than the same time last year; however we are beginning to see signs that the second half of 2013 could provide opportunities for growth, either through reactivating existing rigs or by adding new equipment. Trinidad's growing free cash flow and improved financial flexibility positions us well to take advantage of the opportunities as they arise."
FINANCIAL HIGHLIGHTS
Three months ended March 31, | ||||||
($ thousands except share and per share data) | 2013 | 2012 | % Change | |||
Revenue | 247,186 | 260,394 | (5.1) | |||
Revenue, net of third party costs | 227,377 | 239,870 | (5.2) | |||
Operating income (1) | 98,359 | 104,422 | (5.8) | |||
Operating income percentage (1) | 39.8% | 40.1% | (0.7) | |||
Operating income - net percentage (1) | 43.3% | 43.5% | (0.5) | |||
EBITDA (1) | 82,050 | 91,240 | (10.1) | |||
Per share (diluted) (2) | 0.68 | 0.75 | (9.3) | |||
Adjusted EBITDA (1) | 84,836 | 91,951 | (7.7) | |||
Per share (diluted) (2) | 0.70 | 0.76 | (7.9) | |||
Cash provided by operations | 40,495 | 67,467 | (40.0) | |||
Per share (basic / diluted) (2) | 0.34 | 0.56 | (39.3) | |||
Funds provided by operations (1) | 64,943 | 71,456 | (9.1) | |||
Per share (basic / diluted) (2) | 0.54 | 0.59 | (8.5) | |||
Net earnings | 32,748 | 34,468 | (5.0) | |||
Per share (basic / diluted) (2) | 0.27 | 0.29 | (6.9) | |||
Adjusted net earnings (1) | 35,534 | 42,698 | (16.8) | |||
Per share (basic / diluted) (2) | 0.29 | 0.35 | (17.1) | |||
Capital expenditures net of dispositions | 16,876 | 60,651 | (72.2) | |||
Dividends declared | 6,043 | 6,043 | - | |||
Shares outstanding - diluted | ||||||
(weighted average) (2) | 120,859,476 | 120,882,495 | - | |||
As at | March 31, | December 31, | ||||
($ thousands except percentage data) | 2013 | 2012 | % Change | |||
Total assets | 1,572,052 | 1,541,294 | 2.0 | |||
Total long-term liabilities | 584,930 | 585,629 | (0.1) |
(1) | Readers are cautioned that Operating income, Operating income percentage, Operating income - net percentage, EBITDA, Adjusted EBITDA, Funds provided by operations, Adjusted net earnings and the related per share information do not have standardized meanings prescribed by IFRS - see "Non-GAAP Measures" and "Additional 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, of the number of shares issuable pursuant to the Incentive Option Plan. |
OPERATING HIGHLIGHTS
Three months ended March 31, | |||||||
2013 | 2012 | % Change | |||||
Land Drilling Market | |||||||
Operating days (1) | |||||||
Canada | 4,198 | 4,107 | 2.2 | ||||
United States and International | 4,453 | 5,262 | (15.4) | ||||
Rate per operating day (2, 3) | |||||||
Canada (CDN$) | 25,401 | 24,206 | 4.9 | ||||
United States and International (CDN$) | 22,416 | 21,935 | 2.2 | ||||
United States and International (US$) | 22,487 | 21,698 | 3.6 | ||||
Utilization rate - operating day (1, 4) | |||||||
Canada | 79% | 84% | (6.0) | ||||
United States and International | 72% | 90% | (20.0) | ||||
Number of drilling rigs at quarter end | |||||||
Canada | 60 | 54 | 11.1 | ||||
United States and International | 68 | 66 | 3.0 | ||||
Coring and surface casing rigs | 15 | 20 | (25.0) | ||||
Barge Drilling Market | |||||||
Operating days (1) | 415 | 364 | 14.0 | ||||
Rate per operating day (CDN$) (2, 3) | 29,097 | 25,448 | 14.3 | ||||
Rate per operating day (US$) (2, 3) | 29,158 | 25,204 | 15.7 | ||||
Utilization rate - operating day (4) | 92% | 80% | 15.0 | ||||
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 include drill days and move days. |
(2) | Rate per operating day is based on operating revenue divided by operating days. |
(3) | Operating revenue is presented net of third party costs. |
(4) | Utilization rate - operating day is based on operating days divided by total days available. |
OVERVIEW
Trinidad recorded solid first quarter results with growing dayrates and relatively stable operating profitability compared to the same period last year, despite softening industry conditions across North America. In Canada, operators were slower to get back to work after the holiday period and the average Canadian industry utilization in the quarter was 58%, down seven percentage points from the previous year. Trinidad was able to continue to outperform the industry with utilization of 15 percentage points above the Canadian industry average for the quarter. In the US, the industry average active rig count for the first quarter was 1,687 rigs, a decrease of 242 rigs from the same quarter last year; however, the downward trend in the US slowed in the first quarter and activity levels have begun to flatten.
Trinidad's Canadian operations reported stable revenue and strong operating margins in the current quarter as the impact of higher dayrates and the addition of new high specification rigs, offset lower utilization levels and a weaker contribution from the coring division. US and international operations were negatively impacted by the industry slowdown in the current quarter as producers high graded their equipment, causing the Company's less modern rigs to become less utilized. Operating income - net percentage in the US and international segment was lower year over year as Trinidad took the opportunity to perform repairs and maintenance work on US rigs that had been working consistently over the past several years.
Strengthening natural gas prices in the first quarter positively impacted producers' cash flows but have not yet reached a level that drives increased drilling for natural gas. However, relatively stable crude oil prices have continued to favor oil drilling over dry gas.
INDUSTRY STATISTICS
2013 | Full Year | 2012 | Full Year | 2011 | ||||||||||||||||
Q1 | 2012 | Q4 | Q3 | Q2 | Q1 | 2011 | Q4 | Q3 | Q2 | |||||||||||
Commodity Prices | ||||||||||||||||||||
Aeco natural gas price (CDN$ per gigajoule) | 3.03 | 2.26 | 3.03 | 2.18 | 1.81 | 2.01 | 3.45 | 3.03 | 3.48 | 3.69 | ||||||||||
Henry Hub natural gas price (US$ per mmBtu) | 3.47 | 2.75 | 3.40 | 2.88 | 2.29 | 2.43 | 4.00 | 3.33 | 4.12 | 4.37 | ||||||||||
Western Canada Select crude oil price | ||||||||||||||||||||
(CDN$ per barrel) | 67.64 | 71.70 | 60.73 | 76.29 | 74.10 | 75.91 | 77.53 | 83.38 | 73.52 | 81.96 | ||||||||||
WTI crude oil price (US$ per barrel) | 94.30 | 94.09 | 88.17 | 92.15 | 93.30 | 102.99 | 94.88 | 94.02 | 89.49 | 102.02 | ||||||||||
US Industry Activity | ||||||||||||||||||||
Average US industry active land rig count (1) | 1,687 | 1,852 | 1,741 | 1,837 | 1,902 | 1,929 | 1,825 | 1,954 | 1,893 | 1,778 | ||||||||||
Average Trinidad active land rig count (2) | 49 | 57 | 56 | 55 | 58 | 58 | 59 | 60 | 61 | 57 | ||||||||||
Canadian Industry Activity | ||||||||||||||||||||
Average Canadian industry utilization (3) | 58% | 39% | 36% | 42% | 18% | 65% | 49% | 54% | 54% | 23% | ||||||||||
Average Trinidad utilization (4) | 73% | 52% | 51% | 58% | 24% | 77% | 62% | 69% | 69% | 31% |
(1) | Baker Hughes rig counts (information obtained from Tudor Pickering Holt & Company weekly rig roundup report). | |||||||||||||||||||
(2) | Includes US and international rigs, excludes rigs that are idle but contracted. | |||||||||||||||||||
(3) | Canadian Association of Oilwell drilling Contractors (CAODC) utilization, excludes move days and rigs that are idle but contracted. | |||||||||||||||||||
(4) | Based on drilling days (spud to rig release dates), excludes move days and rigs that are idle but contracted. |
Trinidad remains committed to its leverage reduction strategy and lowered the balance owing on its revolver by $17.6 million during the first quarter. The Company has reduced its Total Debt to EBITDA ratio from a peak of 3.60 times in 2008, to a current level on 1.92 times at March 31, 2013. In order to meet its debt reduction targets, Trinidad has carefully managed its cost structure and its capital spending program by selecting projects that allow the Company to grow its business and continue as an industry leader, while also reducing its debt balances and maintaining a stable dividend payment. Trinidad is moving towards a long-term leverage goal of Total Debt to EBITDA of 1.50 times.
First quarter 2013 highlights
- Trinidad generated revenue of $247.2 million in the first quarter of 2013, a decrease of 5.1% from the same quarter last year and an increase of 17.9% from the previous quarter. Revenue decreased year over year as a result of lower activity levels driven by softening industry conditions. This impact was partially offset by an increase in dayrates over the past year. Revenue increased from the fourth quarter largely as a result of the busy winter drilling season in Canada which drives higher activity levels.
- Operating income - net percentage was 43.3% in the current quarter, in line with the first quarter of 2012 and up from 39.7% in the previous quarter. The impact of stronger profitability in the Canadian operations was largely offset by lower profitability in the US and international division, leaving operating income - net percentage relatively unchanged year over year. Operating profitability improved from the fourth quarter of 2012 due to a strong performance during the winter period in the Company's Canadian operations.
- Adjusted EBITDA was $84.8 million in the first quarter, down 7.7% from the same quarter last year and up 34.0% from the previous quarter. Adjusted EBITDA decreased year over year largely as a result of lower operating income in the current quarter. Higher adjusted EBITDA from the previous quarter was driven by increased activity and profitability in the Canadian operations as a result of the typically busier winter drilling during the first quarter.
- Net earnings were $32.7 million ($0.27 per share (diluted)) in the first quarter of 2013, down 5.0% from the same quarter last year. Net earnings decreased in the current quarter largely due to lower revenue, which led to lower adjusted EBITDA, increased general and administrative expenses, higher depreciation and amortization costs, partially offset by the absence of an impairment charge, lower finance costs and lower income taxes.
- Trinidad continued to repay debt in the current quarter, repaying $17.6 million from its revolving facility. Total Debt to EBITDA was 1.92 times at the end of the quarter, compared to 1.91 times at year-end 2012. The slight increase in leverage in the quarter was driven by the foreign exchange impact on the US dollar based Senior Notes rather than an increase in actual debt balances. Trinidad remains committed to lowering its leverage with a long-term target of 1.50 times.
- During the quarter, Trinidad added one newly built rig to its Canadian operations, under a five-year, take-or-pay contract.
RESULTS FROM OPERATIONS
Canadian Operations
Three months ended March 31, | ||||||||
($ thousands except percentage and operating data) | 2013 | 2012 | % Change | |||||
Operating revenue (1, 2) | 115,339 | 114,966 | 0.3 | |||||
Other revenue | 44 | 126 | (65.1) | |||||
115,383 | 115,092 | 0.3 | ||||||
Operating costs (1, 2) | 59,549 | 63,387 | (6.1) | |||||
Operating income (8) | 55,834 | 51,705 | 8.0 | |||||
Operating income - net percentage (8) | 48.4% | 44.9% | ||||||
Drilling days | 3,864 | 3,784 | 2.1 | |||||
Operating days (3) | 4,198 | 4,107 | 2.2 | |||||
Rate per operating day (CDN$) (4) | 25,401 | 24,206 | 4.9 | |||||
Utilization rate - operating day (5) | 79% | 84% | (6.0) | |||||
Utilization rate - drilling day (6) | 73% | 77% | (5.2) | |||||
CAODC industry average (7) | 58% | 65% | (10.8) | |||||
Number of drilling rigs at quarter end | 60 | 54 | 11.1 | |||||
Number of coring and surface rigs at quarter end | 15 | 20 | (25.0) |
(1) | Inter-segment revenue and operating costs have been excluded of $0.2 million for the three months ended March 31, 2013, and $7.3 million for the three months ended March 31, 2012. Each of these inter-segment revenue and operating costs relates to rig construction for the US operations. |
(2) | Operating revenue and operating costs exclude third party recovery and third party costs of $13.7 million for the three months ended March 31, 2013, and $15.2 million for the three months ended March 31, 2012. |
(3) | Operating days include drill days and move days. |
(4) | Rate per operating day is based on 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. |
(7) | CAODC industry average is based on drilling days divided by total days available. |
(8) | See Non-GAAP Measures Definition and Additional GAAP Measures Definition section of this document for further details. |
Canadian operations performed strongly in the current quarter, recording stable revenue levels and increased profitability when compared to the same quarter last year. Increased dayrates and a slightly higher number of operating days in the first quarter of 2013 led to increased revenues in the Canadian drilling division. However, a weaker contribution from the Company's coring division in the current period caused total operating revenue to remain relatively unchanged.
In the first quarter of 2013, dayrates in Trinidad's Canadian operations increased by $1,195 per operating day when compared to the first quarter of the prior year. Over the past 12 months, Trinidad has added six new high performance rigs to its Canadian fleet which generate higher dayrates and operating margins for the division.
In the first quarter of 2013, operating days increased by 2.2% compared to the same quarter last year, while the utilization rate - operating day decreased by 6.0% over the same period. Operating days increased year over year as a result of the growing fleet in the Canadian operations; however, overall utilization levels decreased, reflecting softening industry activity levels for the Company's less modern equipment, carried over from the latter half of 2012. While Trinidad's utilization level decreased compared to the previous year, the division outperformed the industry average utilization rate by 15 percentage points. Additionally, Trinidad's utilization proved more resilient in the quarter when compared to the prior year, decreasing only four percentage points versus a decrease of seven percentage points in the industry. This is a reflection of the division's high performance equipment and strong contract base.
Trinidad's operating income - net percentage in the Canadian division increased in the current year when compared to the prior year. The higher operating income - net percentage was largely driven by increased dayrates resulting from the delivery of new high-specification rigs and a continued focus on cost containment. In addition, the division had lower repairs and maintenance expenses in the current quarter as a result of timing delays on rig recertification and maintenance work when compared to the same quarter last year.
In the current quarter, Trinidad's active rig fleet increased by six rigs when compared to the first quarter of 2012. All six rigs were constructed at the Company's in-house manufacturing division and were put into service under long-term, take-or-pay contracts. One rig was added in the second quarter of 2012, two were added in each of the third and fourth quarters of 2012, and one more rig was added in the first quarter of 2013.
During the first quarter of 2013, Trinidad's manufacturing division was in the process of completing two rigs for the Canadian operations which were carried over from the 2012 new build program. During the first quarter of 2013, one of these rigs was completed and delivered into the Canadian operations, with the remaining rig expected to be completed by the end of second quarter of 2013. At this time, there have been no additional new build contracts signed for 2013 as Trinidad continues to assess market demand. In comparison, by the end of the first quarter of 2012, the manufacturing division had completed construction of two rigs delivered into the Canadian operations and continued work on two additional new builds which were completed in mid-2012.
Due to the 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. In the current year, the coring division recorded lower activity levels than the previous year as uncertainty in commodity prices resulted in customers curtailing their winter drilling programs in the current year. As well, in the fourth quarter of 2012, Trinidad sold five of its coring rigs, reducing the Company's total number of coring rigs to 15. The sale of these assets was in-line with the Company's strategy to dispose of underutilized assets.
First quarter 2013 versus fourth quarter 2012
When compared to the fourth quarter of 2012, revenue and operating income increased by $37.7 million and $25.4 million, respectively, in the current quarter due to higher activity levels reflecting a more active winter drilling season. Operating income - net percentage also increased in the current quarter to 48.4%, up from 39.1% in the fourth quarter of 2012, as a result of lower repairs and maintenance costs in the current quarter and a writedown of inventory in the manufacturing division that lowered margins in the fourth quarter. Dayrates lowered in the current quarter by $789 per operating day when compared to the previous quarter due to a change in the active rig mix. During the busier winter drilling season, Trinidad had additional shallow and less modern rigs working which typically generate lower dayrates and reduce the division's average dayrate for the quarter.
United States and International Operations
Three months ended March 31, | ||||||||
($ thousands except percentage and operating data) | 2013 | 2012 | % Change | |||||
Operating revenue (1) | 111,972 | 124,774 | (10.3) | |||||
Other revenue | 22 | 4 | 450.0 | |||||
111,994 | 124,778 | (10.2) | ||||||
Operating costs (1) | 69,469 | 72,061 | (3.6) | |||||
Operating income (6) | 42,525 | 52,717 | (19.3) | |||||
Operating income - net percentage (6) | 38.0% | 42.2% | ||||||
Land Drilling Rigs | ||||||||
Drilling days | 3,823 | 4,579 | (16.5) | |||||
Operating days (2) | 4,453 | 5,262 | (15.4) | |||||
Rate per operating day (CDN$) (3) | 22,416 | 21,935 | 2.2 | |||||
Rate per operating day (US$) (3) | 22,487 | 21,698 | 3.6 | |||||
Utilization rate - operating day (4) | 72% | 90% | (20.0) | |||||
Utilization rate - drilling day (5) | 62% | 78% | (20.5) | |||||
Number of drilling rigs at quarter end | 68 | 66 | 3.0 | |||||
Barge Drilling Rigs | ||||||||
Operating days (2) | 415 | 364 | 14.0 | |||||
Rate per operating day (CDN$) (3) | 29,097 | 25,448 | 14.3 | |||||
Rate per operating day (US$) (3) | 29,158 | 25,204 | 15.7 | |||||
Utilization rate - operating day (4) | 92% | 80% | 15.0 | |||||
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 and operating costs exclude third party recovery and third party costs of $6.1 million for the three months ended March 31, 2013, and $5.3 million for the three months ended March 31, 2012. |
(2) | Operating days include drill days and move days. |
(3) | Rate per operating day is based on operating revenue divided by operating days. |
(4) | Utilization rate - operating day is based on operating days divided by total days available. |
(5) | Utilization rate - drilling day is based on drilling days divided by total days available. |
(6) | See Non-GAAP Measures Definition and Additional GAAP Measures Definition section of this document for further details. |
The softening US market conditions that began in the second half of 2012 carried forward into the first quarter of the current year, resulting in a 19.3% reduction in operating income. The reduction in operating income was driven by lower activity levels which were partially offset by higher dayrates in the current period.
Dayrates increased by US$789 and 3.6% in the first quarter of 2013 when compared to the first quarter of 2012 due to a change in the active rig mix. This was partially offset by lower dayrates on the Company's less modern equipment. Trinidad's conventional, less modern equipment was impacted more directly by the slowdown of industry activity than its higher performance, contracted equipment; as more modern equipment became available across the industry, operators chose to high grade their equipment. This change led to a higher proportion of the Company's top performance rigs operating and drove an increase in average dayrates in the current period. This increase was slightly offset by lower standby revenue in the current period of US$490 per operating day versus US$716 per operating day in the first quarter of the prior year.
During the first quarter of 2013, revenue totaled $112.0 million, down 10.2% from the same quarter last year. The impact of higher dayrates in the current quarter was more than offset by lower activity levels as operators remained cautious due to the uncertainty of commodity pricing. Overall, these industry factors resulted in a decrease in utilization and operating days in the current period. Utilization per operating day of 72% decreased from 90% in the same quarter last year, and operating days were 4,453 in the current period, down from 5,262 days in the first quarter of 2012.
Operating income - net percentage was 38.0% in the first quarter 2013, down from 42.2% in the same quarter last year. Operating income - net percentage was lower in the quarter due to lower revenue generation and a smaller relative reduction in operating costs. The current period operating costs were negatively impacted by repairs and maintenance and labor costs as the Company elected to take advantage of the current slowdown to complete necessary upgrades and repairs on rigs that will be deployed in the near future. A number of these rigs have been working consistently since their initial construction, making it difficult to complete this work at an earlier time. Trinidad has focused these repairs and upgrade initiatives on rigs that will be redeployed in the near term.
Trinidad increased its number of land drilling rigs by two in the current period when compared to the prior year. Two rigs were delivered into the US operations in the second quarter of 2012; both of these rigs were purchased externally and retrofitted to meet the Company's specifications. Both rigs were delivered into the Niobrara shale area in Wyoming on three-year, take-or-pay contracts. Overall, the company's continued focus toward in demand high specification equipment, and long-term take or pay contracts, continues to minimize the impact of market uncertainty on the company's operations.
The Company's barge drilling operations continued to perform well with an increase of US$3,954 in dayrates in the first quarter of 2013 when compared to the prior year, as well as an increase in operating days and utilization. Strong operations reflect the solid demand and limited supply of high quality equipment in this sector.
First quarter 2013 versus fourth quarter 2012
In the first quarter of 2013, revenue and operating income decreased by $6.4 million and $4.8 million, respectively, when compared to the fourth quarter of 2012. This decrease was mainly due to a slowdown in industry activity levels in the current period leading to a reduction in Trinidad's operating days of 336 days and lower utilization by five percentage points. Operating income - net percentage also lowered in the current quarter to 38.0%, compared to 40.0% in the fourth quarter as the Company took advantage of the opportunity to perform repairs and maintenance work on rigs that had been working consistently for a number of years. Dayrates were relatively stable quarter over quarter, showing a reduction of US$102 per operating day.
Activity levels in the Barge market increased to 92%, up from 84% in the prior quarter as demand for Trinidad's high quality equipment remained strong. Dayrates lowered by US$1,172 per operating day as a result of completion work done during the quarter which tends to generate lower dayrates.
QUARTERLY ANALYSIS
FINANCIAL HIGHLIGHTS - QUARTERLY ANALYSIS
2013 | 2012 | 2011 | |||||||||||||||
($ millions except per share data and operating data) | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||
Revenue | 247.2 | 209.6 | 215.1 | 174.3 | 260.4 | 231.1 | 202.8 | 154.9 | |||||||||
Operating income (1) | 98.4 | 77.8 | 80.6 | 66.4 | 104.4 | 89.0 | 81.7 | 52.9 | |||||||||
Operating income percentage (1) | 39.8% | 37.1% | 37.5% | 38.1% | 40.1% | 38.5% | 40.3% | 34.2% | |||||||||
Operating income - net percentage (1) | 43.3% | 39.7% | 40.0% | 40.0% | 43.5% | 41.6% | 43.0% | 36.7% | |||||||||
Net earnings (loss) | 32.7 | (12.4) | 20.0 | 12.9 | 34.5 | 25.3 | 30.2 | 5.0 | |||||||||
Adjustments for: | |||||||||||||||||
Depreciation and amortization | 29.9 | 29.2 | 30.4 | 25.8 | 28.1 | 29.1 | 28.6 | 25.4 | |||||||||
Foreign exchange | - | (1.4) | 0.8 | (0.7) | 0.5 | 2.4 | (6.1) | (1.2) | |||||||||
Loss (gain) on sale of property and equipment | - | (11.5) | - | (0.5) | 0.2 | (0.6) | (0.1) | (5.3) | |||||||||
Impairment of property and equipment | - | 70.1 | 1.3 | - | 7.5 | - | - | 9.0 | |||||||||
Finance costs | 10.0 | 10.1 | 10.3 | 10.5 | 10.8 | 10.9 | 10.9 | 10.5 | |||||||||
Income taxes | 9.4 | (22.2) | 2.7 | 4.4 | 10.2 | 4.8 | 6.4 | (3.4) | |||||||||
Other | 2.8 | 1.4 | 2.9 | 1.0 | 0.1 | 2.5 | (0.5) | (0.9) | |||||||||
Income taxes paid | (1.3) | (2.0) | (1.1) | (0.7) | (0.7) | - | (4.5) | (0.9) | |||||||||
Income taxes recovered | - | 0.7 | 3.9 | - | - | 0.8 | 1.5 | - | |||||||||
Interest paid | (18.6) | (1.1) | (19.5) | (1.5) | (19.8) | (1.6) | (21.4) | (3.3) | |||||||||
Funds provided by operations (1) | 64.9 | 60.9 | 51.7 | 51.2 | 71.4 | 73.6 | 45.0 | 34.9 | |||||||||
Net earnings (loss) per share (diluted) | 0.27 | (0.10) | 0.17 | 0.11 | 0.29 | 0.21 | 0.25 | 0.04 | |||||||||
Funds provided by operations per share (diluted) | 0.54 | 0.50 | 0.43 | 0.42 | 0.59 | 0.61 | 0.37 | 0.29 |
(1) | See the Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section of this document for further details. |
NON-GAAP MEASURES HIGHLIGHTS - QUARTERLY ANALYSIS
2013 | 2012 | 2011 | ||||||||||||||
($ millions except per share data and operating data) | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | ||||||||
EBITDA (1) | 82,050 | 63,323 | 64,715 | 53,081 | 91,240 | 69,545 | 76,016 | 41,164 | ||||||||
Per share (diluted) (2) | 0.68 | 0.52 | 0.54 | 0.44 | 0.75 | 0.58 | 0.63 | 0.34 | ||||||||
Adjusted EBITDA (1) | 84,836 | 63,332 | 68,388 | 53,344 | 91,951 | 74,401 | 69,382 | 39,069 | ||||||||
Per share (diluted) (2) | 0.70 | 0.52 | 0.57 | 0.44 | 0.76 | 0.62 | 0.57 | 0.32 | ||||||||
Adjusted net earnings (1) | 35,534 | 57,807 | 24,913 | 13,129 | 42,698 | 30,174 | 23,535 | 11,903 | ||||||||
Per share (diluted) (2) | 0.29 | 0.48 | 0.21 | 0.11 | 0.35 | 0.25 | 0.19 | 0.10 |
(1) | See the Non-GAAP Measures Definitions and Additional 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, of the number of shares issuable pursuant to the Incentive Option Plan. |
OPERATING HIGHLIGHTS - QUARTERLY ANALYSIS
2013 | 2012 | 2011 | |||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | ||||||||||
Land Drilling Market | |||||||||||||||||
Operating days (1) | |||||||||||||||||
Canada | 4,198 | 2,915 | 3,233 | 1,288 | 4,107 | 3,665 | 3,675 | 1,646 | |||||||||
United States and International | 4,453 | 4,789 | 5,038 | 5,289 | 5,262 | 5,547 | 5,579 | 5,170 | |||||||||
Rate per operating day (2,3) | |||||||||||||||||
Canada (CDN$) | 25,401 | 26,190 | 23,501 | 25,343 | 24,206 | 23,652 | 20,315 | 20,796 | |||||||||
United States and International (CDN$) | 22,416 | 22,305 | 22,518 | 22,586 | 21,935 | 20,710 | 18,600 | 18,470 | |||||||||
United States and International (US$) | 22,487 | 22,589 | 22,263 | 22,616 | 21,698 | 20,387 | 19,143 | 19,095 | |||||||||
Utilization rate - operating day (4) | |||||||||||||||||
Canada | 79% | 56% | 62% | 26% | 84% | 74% | 74% | 34% | |||||||||
United States and International | 72% | 77% | 81% | 86% | 90% | 92% | 92% | 89% | |||||||||
Utilization rate for service rigs (5) | - | - | - | - | - | - | - | 34% | |||||||||
Number of drilling rigs at quarter end | |||||||||||||||||
Canada | 60 | 59 | 57 | 55 | 54 | 54 | 54 | 54 | |||||||||
United States and International | 68 | 68 | 68 | 68 | 66 | 64 | 66 | 65 | |||||||||
Coring and surface casing rigs | 15 | 15 | 20 | 20 | 20 | 20 | 20 | 20 | |||||||||
Barge Drilling Market | |||||||||||||||||
Operating days (1) | 415 | 386 | 376 | 429 | 364 | 373 | 454 | 436 | |||||||||
Rate per operating day (CDN$) (2,3) | 29,097 | 29,954 | 30,008 | 29,072 | 25,448 | 25,835 | 24,833 | 22,680 | |||||||||
Rate per operating day (US$) (2,3) | 29,158 | 30,330 | 29,583 | 29,106 | 25,204 | 25,455 | 25,547 | 23,441 | |||||||||
Utilization rate - operating day (4) | 92% | 84% | 82% | 94% | 80% | 81% | 99% | 96% | |||||||||
Number of barge drilling rigs at quarter end | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||
Number of barge drilling rigs under Bareboat Charter at quarter end | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 |
(1) | Operating days include drill days and move days. |
(2) | Rate per operating day is based on operating revenue divided by operating days. |
(3) | Operating revenue is presented net of third party costs. |
(4) | Utilization rate - operating day is based on operating days divided by total days available. |
(5) | In the second quarter of 2011, Trinidad disposed of its 22 well servicing rigs and related equipment. |
FINANCIAL SUMMARY
As at | March 31, | December 31, | ||
($ thousands) | 2013 | 2012 | $ Change | |
Working capital (1) | 136,829 | 109,412 | 27,417 | |
Building loans | 5,601 | 5,754 | (153) | |
Senior Notes | 445,997 | 436,109 | 9,888 | |
Credit facility | 50,359 | 67,969 | (17,610) | |
Total long-term debt (2) | 501,957 | 509,832 | (7,875) | |
Total long-term debt as a percentage of assets | 31.9% | 33.1% | ||
Total assets | 1,572,052 | 1,541,294 | 30,758 | |
Total long-term liabilities | 584,930 | 585,629 | (699) | |
Total long-term liabilities as a percentage of assets | 37.2% | 38.0% | ||
Shareholders' equity | 897,407 | 863,849 | 33,558 | |
Total long-term debt to shareholders' equity | 55.9% | 59.0% | ||
(1) | See Non-GAAP Measures Definition section of this document for further details. | |||
(2) | Total long-term debt includes current portion of long-term debt and long-term debt. |
For the three months ended March 31, 2013, working capital increased by $27.4 million when compared to the first quarter of 2012 due to an increase in current assets of $25.3 million and a decrease in current liabilities of $2.1 million. The increase in current assets was mainly a result of an increase of receivables and cash in the current period as a result of higher activity levels in the first quarter of 2013 versus the fourth quarter of 2012 due to seasonality factors in the Canadian operations. In addition, current assets decreased due to lower inventory reflecting a decrease in the level of rig construction, lower prepaid expenses due to amortization, as well as a decrease in assets held for sale as these assets were re-classified to property and equipment during the period.
The reduction in current liabilities during the period was mainly a result of a decrease in payables due to timing of cash settlements as well as a decrease in deferred revenue due to fewer rigs receiving delay and early termination revenues in the current period. These factors were slightly offset by an increase in the current portion of long-term debt due to a building mortgage becoming current as of March 31, 2013 as it is due January of 2014.
Trinidad's total long-term debt balance declined by $7.9 million during the current period when compared to the year ended December 31, 2012. The reduction in debt was due to a decrease in the revolving debt balances in the current period offset by an increase in the Senior Notes at quarter end. The decline in debt is in line with the Company's core objective of sustainable growth, in conjunction with leverage reduction.
Trinidad's revolving debt facilities decreased by $17.6 million in the current period as a result of payments made during the period. At March 31, 2013, Trinidad had $44.0 million outstanding on its Canadian revolving credit facility and US$8.0 million on its US revolving credit facility, leaving $156.0 million and US$92.0 million unutilized in the facilities, 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). The facility matures on December 16, 2016, and is subject to annual extensions of an additional year on each anniversary.
The value of the Senior Notes increased by $9.9 million as a result of the change in the US dollar foreign exchange rate at March 31, 2013 versus December 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.
A total of $17.3 million of capital expenditures were spent during the three months ended March 31, 2013, compared to $61.8 million for the same period in the prior year. Capital expenditures were substantially related to the Company's rig build program as the Company delivered one new rig into service in the Canadian operations in March of 2013 and continued work on one more rig expected to be completed in the second quarter of 2013.
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. Trinidad's 2013 capital program is expected to total between $70 million and $80 million. The capital program includes the completion of two contracted rigs for the Canadian operations carried over from the 2012 capital program, maintenance capital and select upgrade capital to improve the efficiency and marketability of specific existing equipment.
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 | ||||
2013 | 2012 | ||||||
Consolidated Senior Debt to Consolidated EBITDA (1) | 0.21:1 | 0.27:1 | 3.00:1 maximum | ||||
Consolidated Total Debt to Consolidated EBITDA (1) | 1.92:1 | 1.91:1 | 4.00:1 maximum | ||||
Consolidated EBITDA to Consolidated Cash Interest Expense (1) | 6.74:1 | 6.76:1 | 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
To date in 2013, industry activity levels have been lower than at the same time last year; however, indications are becoming more positive for the second half of the year and beyond. Improving natural gas prices add cash flow for producers, and while prices have not risen high enough to generate a rush back to dry natural gas drilling, a continued increase could see additional gas drilling in 2013. Trinidad views improving natural gas prices as a positive for the industry but believes that stable oil prices at the current level are enough to drive reasonable activity levels, particularly for modern, technically advanced equipment.
Trinidad completed one new rig in the first quarter that has been delivered to the Duvernay Shale under a long-term contract and has one additional rig that it expects to complete construction on by the end of the second quarter. At this time the Company has not signed any additional new build contracts; however, growing demand for deep capacity, high performance rigs could provide growth opportunities for the near future.
Trinidad's ability to produce solid results in the first quarter of 2013 despite lower overall industry activity is a direct result of the Company's high quality fleet and its extensive long-term contract base. Approximately three-quarters of Trinidad's fleet are considered high performance; these rigs have demonstrated their ability to continue to meet customers' needs by achieving high activity levels and strong dayrates. Trinidad currently has approximately 55% of its fleet under long-term, take-or-pay contracts with an average term remaining of approximately 1.5 years, providing the Company with significant revenue stability.
Trinidad has made important progress on its debt reduction strategy and as the Company nears its target of 1.5 times for Total debt to EBITDA; its improved financial flexibility and growing cash flow provide the Company with a number of opportunities to add value. These opportunities may take the form of growth in existing operations, new areas of development or international expansion opportunities. Looking further out, the Company sees added upside potential if some of the liquefied natural gas plants planned for the west coast of Canada are built or if natural gas prices strengthen. In addition, Trinidad will continue to review other opportunities for its growing level of cash flow, including new capital projects and alternative avenues for adding shareholder value.
Trinidad expects that industry conditions will remain relatively stable in 2013 with producers adjusting capital spending programs in relation to commodity price levels. The Company expects that its modern, high performance equipment will continue to be in demand, but that unless commodity prices increase there will be limited demand for less modern equipment.
With a high level of in-demand equipment and long-term contracts, a more diversified customer base and growing financial flexibility, Trinidad is well positioned to perform strongly and capitalize on opportunities for growth for the remainder of 2013 and beyond.
CONFERENCE CALL
A conference call and webcast to discuss the results will be held for the investment community on Thursday May 9th, 2013 beginning at 9:00 a.m. MT (11:00 a.m. ET). 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 2:00 p.m. ET on May 9th, 2013 until midnight May 16th, 2013 by dialing (855) 859 2056 or (416) 849-0833 and entering replay access code 53235010.
A live audio webcast of the conference call will also be available via the Investor Relations page of Trinidad's website.
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 | 2013 | 2012 | ||
Assets | ||||
Current Assets | ||||
Cash and cash equivalents | 11,792 | 4,933 | ||
Accounts receivable | 202,077 | 182,071 | ||
Inventory | 8,353 | 8,600 | ||
Prepaid expenses | 4,322 | 4,808 | ||
Assets held for sale | - | 816 | ||
226,544 | 201,228 | |||
Property and equipment | 1,257,633 | 1,253,921 | ||
Intangible assets and goodwill | 87,875 | 86,145 | ||
1,572,052 | 1,541,294 | |||
Liabilities | ||||
Current Liabilities | ||||
Accounts payable and accrued liabilities | 76,995 | 82,265 | ||
Dividends payable | 6,043 | 6,043 | ||
Deferred revenue | 1,076 | 2,891 | ||
Current portion of long-term debt | 5,601 | 617 | ||
89,715 | 91,816 | |||
Long-term debt | 496,356 | 509,215 | ||
Deferred income taxes | 88,574 | 76,414 | ||
674,645 | 677,445 | |||
Shareholders' Equity | ||||
Common shares | 952,043 | 952,043 | ||
Contributed surplus | 50,415 | 50,245 | ||
Accumulated other comprehensive loss | (27,720) | (34,403) | ||
Deficit | (77,331) | (104,036) | ||
897,407 | 863,849 | |||
1,572,052 | 1,541,294 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||
Three months ended March 31, | |||||
($ thousands except per share data) - unaudited | 2013 | 2012 | |||
Revenue | |||||
Oilfield service revenue | 247,120 | 260,264 | |||
Other revenue | 66 | 130 | |||
247,186 | 260,394 | ||||
Expenses | |||||
Operating expense | 148,827 | 155,972 | |||
General and administrative | 16,314 | 12,566 | |||
Depreciation and amortization | 29,859 | 28,130 | |||
Foreign exchange | (5) | 616 | |||
Loss on sale of property and equipment | 36 | 170 | |||
Impairment of property and equipment | - | 7,519 | |||
195,031 | 204,973 | ||||
Finance costs | 9,970 | 10,802 | |||
Earnings before income taxes | 42,185 | 44,619 | |||
Income taxes | |||||
Current | 1,071 | (55) | |||
Deferred | 8,366 | 10,206 | |||
9,437 | 10,151 | ||||
Net earnings | 32,748 | 34,468 | |||
Other comprehensive income (loss) | |||||
Foreign currency translation adjustment, net of income tax | 6,683 | (6,781) | |||
6,683 | (6,781) | ||||
Total comprehensive income | 39,431 | 27,687 | |||
Earnings per share | |||||
Net earnings | |||||
Basic / Diluted | 0.27 | 0.29 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||
For the three months ended March 31, 2013 and 2012 | ||||||||||
Accumulated | ||||||||||
other | Retained | |||||||||
Common | Contributed | comprehensive | earnings | Total | ||||||
($ thousands) - unaudited | shares | surplus | income (loss) (1) | (deficit) | equity | |||||
Balance at December 31, 2012 | 952,043 | 50,245 | (34,403) | (104,036) | 863,849 | |||||
Share-based payments | - | 170 | - | - | 170 | |||||
Total comprehensive income (loss) | - | - | 6,683 | 32,748 | 39,431 | |||||
Dividends | - | - | - | (6,043) | (6,043) | |||||
Balance at March 31, 2013 | 952,043 | 50,415 | (27,720) | (77,331) | 897,407 | |||||
Balance at January 1, 2012 | 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 |
(1) | Accumulated other comprehensive income (loss) consisted of foreign currency translation adjustment. |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
For three months ended March 31, | ||||
($ thousands) - unaudited | 2013 | 2012 | ||
Cash provided by (used in) | ||||
Operating activities | ||||
Net earnings | 32,748 | 34,468 | ||
Adjustments for: | ||||
Depreciation and amortization | 29,859 | 28,130 | ||
Foreign exchange | (5) | 616 | ||
Loss on sale of property and equipment | 36 | 170 | ||
Impairment of property and equipment | - | 7,519 | ||
Finance costs | 9,970 | 10,802 | ||
Income taxes | 9,437 | 10,151 | ||
Other | 2,788 | 91 | ||
Income taxes paid | (1,314) | (702) | ||
Income taxes recovered | - | - | ||
Interest paid | (18,579) | (19,793) | ||
Interest received | 3 | 4 | ||
Funds provided by operations | 64,943 | 71,456 | ||
Change in non-cash operating working capital | (24,448) | (3,989) | ||
Cash provided by operations | 40,495 | 67,467 | ||
Investing activities | ||||
Purchase of property and equipment | (17,337) | (61,805) | ||
Proceeds from disposition of property and equipment | 461 | 1,154 | ||
Change in non-cash working capital | 7,275 | (7,146) | ||
Cash used by investing | (9,601) | (67,797) | ||
Financing activities | ||||
Proceeds from long-term debt | 10,949 | 20,000 | ||
Repayments of long-term debt | (29,138) | (18,137) | ||
Dividends paid | (6,043) | (6,043) | ||
Cash used by financing | (24,232) | (4,180) | ||
Cash flow from operating, investing and financing activities | 6,662 | (4,510) | ||
Effect of translation of foreign currency cash | 197 | (302) | ||
Increase (decrease) in cash for the period | 6,859 | (4,812) | ||
Cash and cash equivalents (bank indebtedness) - beginning of period | 4,933 | (4,600) | ||
Cash and cash equivalents (bank indebtedness) - end of period | 11,792 | (9,412) |
SEGMENTED INFORMATION
The following presents the result of Trinidad's operating segments:
Three months ended | United States / | Inter- | |||||||
March 31, 2013 | Canadian | International | segment | ||||||
($ thousands) | Operations | Operations | Eliminations | Corporate | Total | ||||
Operating revenue | 115,339 | 111,972 | - | - | 227,311 | ||||
Other revenue | 44 | 22 | - | - | 66 | ||||
Third party recovery | 13,701 | 6,108 | - | - | 19,809 | ||||
Inter-segment revenue | 174 | - | (174) | - | - | ||||
129,258 | 118,102 | (174) | - | 247,186 | |||||
Operating costs | 59,549 | 69,469 | - | - | 129,018 | ||||
Third party costs | 13,701 | 6,108 | - | - | 19,809 | ||||
Inter-segment operating | 174 | - | (174) | - | - | ||||
Operating income | 55,834 | 42,525 | - | - | 98,359 | ||||
Depreciation and amortization | 11,882 | 17,977 | - | - | 29,859 | ||||
Loss (gain) on sale of property and equipment | 141 | (105) | - | - | 36 | ||||
Impairment of property and equipment | - | - | - | - | - | ||||
12,023 | 17,872 | - | - | 29,895 | |||||
Segmented income | 43,811 | 24,653 | - | - | 68,464 | ||||
General and administrative | - | - | - | 16,314 | 16,314 | ||||
Foreign exchange | - | - | - | (5) | (5) | ||||
Finance costs | - | - | - | 9,970 | 9,970 | ||||
Income taxes | - | - | - | 9,437 | 9,437 | ||||
Net earnings (loss) | 43,811 | 24,653 | - | (35,716) | 32,748 | ||||
Purchase of property and equipment | 16,910 | 427 | - | - | 17,337 |
Three months ended | United States / | Inter- | |||||||
March 31, 2012 | Canadian | International | segment | ||||||
($ thousands) | Operations | Operations | Eliminations | Corporate | Total | ||||
Operating revenue | 114,966 | 124,774 | - | - | 239,740 | ||||
Other revenue | 126 | 4 | - | - | 130 | ||||
Third party recovery | 15,238 | 5,286 | - | - | 20,524 | ||||
Inter-segment revenue | 7,296 | - | (7,296) | - | - | ||||
137,626 | 130,064 | (7,296) | - | 260,394 | |||||
Operating costs | 63,387 | 72,061 | - | - | 135,448 | ||||
Third party costs | 15,238 | 5,286 | - | - | 20,524 | ||||
Inter-segment operating | 7,296 | - | (7,296) | - | - | ||||
Operating income | 51,705 | 52,717 | - | - | 104,422 | ||||
Depreciation and amortization | 9,362 | 18,768 | - | - | 28,130 | ||||
Loss (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 | 32,248 | - | - | 68,603 | ||||
General and administrative | - | - | - | 12,566 | 12,566 | ||||
Foreign exchange | - | - | - | 616 | 616 | ||||
Finance costs | - | - | - | 10,802 | 10,802 | ||||
Income taxes | - | - | - | 10,151 | 10,151 | ||||
Net earnings (loss) | 36,355 | 32,248 | - | (34,135) | 34,468 | ||||
Purchase of property and equipment | 25,232 | 36,573 | - | - | 61,805 |
ADVISORY
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 EBITDA, Adjusted EBITDA, Adjusted net earnings, 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:
"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 net earnings prior to the effect of foreign exchange, share-based payment expense and impairment charges and is not intended to represent net earnings as calculated in accordance with IFRS.
"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 12 months (TTM). Consolidated EBITDA used in this financial ratio is calculated as EBITDA plus share-based payment expense and unrealized foreign exchange.
"Total Debt to EBITDA" is defined as the consolidated balance of long-term debt, which includes the Senior Debt, Senior Notes Payable and dividends payable at quarter end, to consolidated EBITDA for the TTM. Consolidated EBITDA used in this financial ratio is calculated as EBITDA plus share-based payment expense 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 payment expense 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).
ADDITIONAL GAAP MEASURES DEFINITIONS
The Company uses certain additional GAAP financial measures within the financial statements and this document that are not defined terms under IFRS to assess performance. Management believes that these measures provide useful supplemental information to investors. These financial measures are computed on a consistent basis for each reporting period and include Funds provided by operations, Operating income, Operating income percentage and Operating income - net percentage. These additional GAAP measures are identified and defined as follows:
"Funds provided by operations" is used by management and investors to analyze the funds generated by Trinidad's principal business activities prior to consideration of working capital. This balance is reported in the Consolidated Statements of Cash Flows included in the cash provided by operating activities section.
"Operating income" is used by management and investors to analyze overall and segmented operating performance. Operating income is not intended to represent an alternative to net earnings or other measures of financial performance calculated in accordance with IFRS. Operating income is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information contained in the notes to the consolidated financial statements. Operating income is defined as revenue less operating expenses.
"Operating income percentage" is used by management and investors to analyze overall and segmented operating performance. Operating income percentage is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information in the notes to the consolidated financial statements. Operating income percentage is defined as operating income divided by revenue.
"Operating income - net percentage" is used by management and investors to analyze overall and segmented operating performance. Operating income - 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 financial statements. Operating income - net percentage is defined as operating income divided by revenue net of third party costs.
FORWARD-LOOKING STATEMENTS
This 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.
SOURCE: Trinidad Drilling Ltd.
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Lyle Whitmarsh,
Chief Executive Officer
Brent Conway,
President
Lisa Ciulka,
Vice President, Investor Relations
(403) 294-4401
email: [email protected]
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