Trinidad Energy Services Income Trust announces customer backed rig construction program21 January 2006
Trinidad Energy Services Income Trust ("Trinidad" or the "Trust") is pleased to announce the following:
Customer Backed 7 Rig Construction Program
Trinidad has been awarded long term contracts with three major North American oil and gas exploration and development companies whereby it will provide 7 new drilling rigs ranging in depth capacity from 2,000 metres to 5,500 metres. Two of the rigs will be operating in western Canada and five will be operating in the United States. Each of the 7 rigs is backed by a take or pay contract. Five of the rigs that will operate in the United States have also been partially financed by a customer capital contribution of $2.0 million (US) per rig.
The total construction costs for the 7 rigs will be approximately $78 million (Cdn) and will be funded through Trinidad's recently expanded credit facility, internal cashflow, and the client capital contribution.
Trinidad's new construction program consists of one 2,000 metre single rig, one 3,200 metre double rig (already completed), four 5,000 metre 1,200 h.p. triple rigs, and one 5,500 metre 1,500 h.p. triple rig. The single drilling rig has a three year 200 days per year contract with price escalation clauses, the double drilling rig has a two year contract with 220 days provided for in each year. Both the 2,000 and 3,200 metre rigs will work primarily in Western Canada. The single rig is expected to be put into the field in the next thirty days and the 3,200 metre double rig was put into service during the fourth quarter of 2005. The five triple rigs for the United States provide for 325 days per year for each of the next three years. The rigs being commissioned in the United States are expected to be delivered in April, June, July, September, and November of 2006 and are currently planning to operate in Texas and Oklahoma.
These 7 rigs will increase Trinidad's United States drilling fleet to 37 rigs and the Canadian drilling fleet to 64 rigs once the construction programs are completed.
More specifically, the rig construction program will result in:
- An increase in operating cash flow per unit and cash available for
distribution per unit as the rigs commence operations;
- Provide unitholders with downside risk protection as a result of the
take or pay contracts;
- An increased presence within the United States market at fixed current
market day rates at a guaranteed minimum rig utilization of 89%; and
- Further customer validation of Trinidad's deep drilling market focus.
In preparation for the construction of the rigs, Trinidad has secured shop space, confirmed rig delivery dates and has begun ordering longer lead time components for these rigs. The construction program adds to both the Trust distribution capabilities and the stability of cash flow from its operations.
Trinidad Energy Services Income Trust is a growth oriented income trust that trades on the TSX under the symbol TDG.UN. Trinidad's divisions operate in the drilling and well servicing sectors of the Canadian oil and gas industry. With the completion of the acquisition of the Cheyenne rigs and with new rig construction, the Trust will have 101 drilling rigs ranging in depths from 1,000 - 6,500 metres. In addition to its drilling rigs, Trinidad has 16 service rigs that have been completely retrofitted or are new within the past five years and 1 more service rig currently under construction. Trinidad also operates 17 pre-set and coring rigs. 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 and competitive in the industry.
This news release may contain forward-looking statements concerning the anticipated performance of the Trust. Forward-looking statements are based on the estimates and opinions of management at the date the statements are made, and the Trust undertakes no obligation to update forward-looking statements if conditions or opinions should change.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the trust units in any jurisdiction. The trust units offered will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States or to a U.S. person, absent registration, or an applicable exemption therefrom.
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
For further information: Michael Heier, Chairman and Chief Executive Officer or Brent Conway, Chief Financial Officer at (403) 265-6525, Fax: (403) 265-4168, E-mail: twood@trinidaddrilling.com
Source: newswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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