/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
TSX SYMBOL: TDG
CALGARY, March 4, 2015 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or the
"Company") reported fourth quarter and full year 2014 results. Activity
levels and operating income (1) were strong in the fourth quarter, despite weakening oil prices.
"Market conditions have changed very quickly in the past few months,"
said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "Our
operations continued to perform well in the fourth quarter; however, we
began to see the impact of lower commodity prices more significantly in
the first quarter of 2015. In light of these weaker market condition,
we have lowered our 2015 capital program and reduced operating and
administrative costs. We expect that our extensive contract coverage,
high quality fleet and financial flexibility will allow Trinidad to
withstand the downturn and be well positioned to perform strongly as
market conditions improve. "
(1)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
FINANCIAL HIGHLIGHTS
|
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|
|
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|
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|
|
|
|
| Three months ended December 31, |
| For the years ended December 31, |
($ thousands except share and per share data)
| 2014 |
|
2013
|
|
% Change
|
| 2014 |
|
2013
|
|
% Change
|
Revenue
| 276,346 |
|
224,563
|
|
23.1
|
| 941,334 |
|
845,888
|
|
11.3
|
Revenue, net of third party costs
| 261,875 |
|
209,961
|
|
24.7
|
| 883,522 |
|
791,251
|
|
11.7
|
Operating income (1) | 93,826 |
|
99,607
|
|
(5.8)
|
| 315,159 |
|
329,807
|
|
(4.4)
|
Operating income percentage (1) | 34.0% |
|
44.4%
|
|
(23.4)
|
| 33.5% |
|
39.0%
|
|
(14.2)
|
Operating income - net percentage (1) | 35.6% |
|
47.0%
|
|
(24.3)
|
| 35.7% |
|
41.2%
|
|
(14.9)
|
EBITDA (1) | 21,308 |
|
81,246
|
|
(73.8)
|
| 175,215 |
|
255,221
|
|
(31.3)
|
|
Per share (diluted) (2) | 0.15 |
|
0.65
|
|
(76.9)
|
| 1.27 |
|
2.09
|
|
(39.2)
|
Adjusted EBITDA (1) | 77,341 |
|
83,830
|
|
(7.7)
|
| 252,046 |
|
270,445
|
|
(6.8)
|
|
Per share (diluted) (2) | 0.56 |
|
0.67
|
|
(16.4)
|
| 1.82 |
|
2.21
|
|
(18.0)
|
Cash provided by operations
| 5,857 |
|
102,905
|
|
(94.3)
|
| 156,519 |
|
299,013
|
|
(47.7)
|
|
Per share (basic / diluted) (2) | 0.04 |
|
0.83
|
|
(95.2)
|
| 1.13 |
|
2.45
|
|
(53.9)
|
Funds provided by operations (1) | 79,277 |
|
83,328
|
|
(4.9)
|
| 216,973 |
|
231,135
|
|
(6.1)
|
|
Per share (basic / diluted) (2) | 0.58 |
|
0.67
|
|
(13.4)
|
| 1.57 |
|
1.89
|
|
(16.9)
|
Net earnings
| (13,507) |
|
28,690
|
|
(147.1)
|
| 6,596 |
|
70,952
|
|
(90.7)
|
|
Per share (basic / diluted) (2) | (0.10) |
|
0.23
|
|
(143.5)
|
| 0.05 |
|
0.58
|
|
(91.4)
|
Adjusted net earnings (1) | 23,565 |
|
31,221
|
|
(24.5)
|
| 60,356 |
|
84,835
|
|
(28.9)
|
|
Per share (basic / diluted) (2) | 0.17 |
|
0.25
|
|
(32.0)
|
| 0.44 |
|
0.69
|
|
(36.2)
|
Capital expenditures
| 73,401 |
|
39,791
|
|
84.5
|
| 276,674 |
|
90,260
|
|
206.5
|
Dividends declared
| 6,758 |
|
6,907
|
|
(2.2)
|
| 27,486 |
|
25,036
|
|
9.8
|
Shares outstanding - basic
| |
|
|
|
|
| |
|
|
|
|
|
(weighted average) (2) | 137,634,403 |
|
123,870,307
|
|
11.1
|
| 138,033,887 |
|
121,619,238
|
|
13.5
|
Shares outstanding - diluted
| |
|
|
|
|
| |
|
|
|
|
|
(weighted average) (2) | 137,634,403 |
|
124,688,504
|
|
10.4
|
| 138,419,754 |
|
122,092,835
|
|
13.4
|
Total assets
| 1,941,621 |
|
1,827,496
|
|
6.2
|
| 1,941,621 |
|
1,827,496
|
|
6.2
|
Total long-term liabilities
| 628,047 |
|
564,095
|
|
11.3
|
| 628,047 |
|
564,095
|
|
11.3
|
(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 Definitions" and "Additional GAAP Measures
Definitions".
|
(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.
|
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|
OPERATING HIGHLIGHTS
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| Three months ended December 31, |
| For the years ended December 31, |
|
| 2014 |
2013
|
% Change
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| 2014 |
2013
|
% Change
|
Land Drilling Market | |
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| |
|
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Operating days (1) | |
|
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| |
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Canada
| 3,271 |
2,934
|
11.5
|
| 12,203 |
11,585
|
5.3
|
|
United States and International
| 4,820 |
4,470
|
7.8
|
| 18,478 |
18,234
|
1.3
|
Rate per operating day (1) | |
|
|
| |
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Canada (CDN$)
| 26,624 |
25,102
|
6.1
|
| 25,638 |
24,892
|
3.0
|
|
United States and International (CDN$)
| 25,150 |
27,243
|
(7.7)
|
| 23,873 |
23,951
|
(0.3)
|
|
United States and International (US$)
| 22,476 |
26,213
|
(14.3)
|
| 21,749 |
23,381
|
(7.0)
|
Utilization rate - operating day (1) | |
|
|
| |
|
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Canada
| 62% |
52%
|
18.6
|
| 57% |
53%
|
8.5
|
|
United States and International
| 97% |
71%
|
35.8
|
| 87% |
73%
|
18.4
|
Number of drilling rigs at period end (4) | |
|
|
| |
|
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Canada
| 53 |
61
|
(13.1)
|
| 53 |
61
|
(13.1)
|
|
United States and International
| 47 |
64
|
(26.6)
|
| 47 |
64
|
(26.6)
|
|
Coring and surface casing rigs (2) | - |
-
|
-
|
| - |
-
|
-
|
Barge Drilling Market | |
|
|
| |
|
|
|
Operating days (1) | 212 |
394
|
(46.2)
|
| 1,049 |
1,703
|
(38.4)
|
|
Rate per operating day (CDN$) (1) | 36,616 |
34,810
|
5.2
|
| 37,655 |
32,388
|
16.3
|
|
Rate per operating day (US$) (1) | 32,795 |
33,490
|
(2.1)
|
| 34,424 |
31,605
|
8.9
|
|
Utilization rate - operating day (1) | 46% |
86%
|
(46.3)
|
| 57% |
93%
|
(38.9)
|
|
Number of barge drilling rigs at period end
| 2 |
2
|
-
|
| 2 |
2
|
-
|
|
Number of barge drilling rigs under Bareboat
Charter Agreements at period end
| 3 |
3
|
-
|
| 3 |
3
|
-
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Joint Venture Operations (3) | |
|
|
| |
|
|
|
Number of drilling rigs at period end
| 6 |
-
|
100.0
|
| 6 |
-
|
100.0
|
(1)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
(2)
|
In the third quarter of 2013, Trinidad disposed of its 15 remaining
coring rigs and all related equipment.
|
(3)
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Trinidad is party to a joint venture with a wholly-owned subsidiary of
Halliburton. These rigs are owned by the joint venture.
|
(4)
|
Refer to the Results from Operations section for details on changes to
the rig count.
|
OVERVIEW
Trinidad recorded solid operating results in the fourth quarter and full
year 2014, which were overshadowed by falling commodity prices at year
end. Activity levels in Canada and the US were higher than the previous
year, and the Company's joint venture made positive contributions to
adjusted EBITDA and net earnings in its first year of operations.
Adjusted EBITDA was $252.0 million in 2014, down 6.8% from the previous
year as a result of lower early termination and standby revenue in the
current year in the US operations, partly offset by stronger operating
results in Canada. In addition, higher operating costs in the US and
international division as rigs were reactivated and a weaker
contribution from the barge rigs negatively impacted adjusted EBITDA in
2014. In the fourth quarter of 2014, adjusted EBITDA was $77.3 million,
down 7.8% from the same quarter last year, largely as a result of lower
early termination and standby revenue in the current quarter. Excluding
the impact of early termination and standby revenue in both years,
Trinidad's adjusted EBITDA was $18.2 million higher in the fourth
quarter and $1.6 million higher for the full year of 2014, compared to
the same periods of 2013, driven by higher activity and dayrates year
over year.
Net earnings (loss) in the fourth quarter and full year 2014 were a loss
of $13.5 million and earnings of $6.6 million, respectively, down
147.0% and 90.7% from the respective periods in 2013. Net earnings
lowered in the current periods as a result of lower adjusted EBITDA
discussed above, higher depreciation and amortization expenses, an
impairment of property and equipment, partly offset by lower
share-based payment expenses, lower income taxes and a gain on sale of
property and equipment.
In 2014, commodity prices trended lower as the year progressed,
particularly for oil. A growing supply of crude oil in North America
and a continuing strong supply coming from OPEC countries resulted in
significantly lower prices at the end of 2014 compared to 2013. Lower
oil prices began to impact Trinidad's operations in late 2014; however,
the impact was felt more fully in early 2015 as customers cut back
drilling programs and activity levels lowered.
In the fourth quarter and full year 2014, Canadian industry activity
levels averaged 47% and 44%, respectively, up from 43% and 40% in the
same periods last year. Trinidad maintained its premium over industry
activity and its Canadian utilization rate - drilling days increased to
57% in the current quarter and 52% for the full year in 2014, compared
to 48% for both periods last year.
In the US, industry activity increased in the fourth quarter and full
year of 2014, averaging 1,843 and 1,789 active rigs, respectively, up
from 1,679 and 1,685 active rigs, respectively for the same periods
last year. Trinidad's US and international division averaged
approximately 52 active rigs in the fourth quarter and 50 active rigs
in 2013, up from approximately 49 active rigs in the fourth quarter of
2013 and in line with the full year in 2013.
During the fourth quarter and full year 2014, the US dollar was stronger
against the Canadian dollar than during the same periods last year.
Trinidad has a significant portion of its business that operates in US
dollars and the change in foreign exchange rates in the quarter had a
noticeable, and largely positive impact on the Company's results. The
stronger US dollar positively impacted EBITDA generated by Trinidad's
US and international division but also drove increased depreciation
expenses and increased the value of Trinidad's US dollar based senior
note in the fourth quarter and full year 2014.
INDUSTRY STATISTICS
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Full Year
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2014
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Full Year
|
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2013
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Full Year
|
|
2012
|
|
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2014
|
|
Q4
|
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Q3
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Q2
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Q1
|
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2013
|
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Q4
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Q3
|
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Q2
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Q1
|
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2012
|
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Q4
|
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Q3
|
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Q2
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Q1
|
Commodity Prices |
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Aeco natural gas price (CDN$ per gigajoule)
|
|
|
4.28
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|
3.44
|
|
3.82
|
|
4.45
|
|
5.34
|
|
3.01
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|
3.33
|
|
2.32
|
|
3.36
|
|
3.03
|
|
2.26
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|
3.03
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|
2.18
|
|
1.81
|
|
2.01
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Henry Hub natural gas price (US$ per mmBtu)
|
|
|
4.36
|
|
3.76
|
|
3.94
|
|
4.59
|
|
5.15
|
|
3.72
|
|
3.84
|
|
3.55
|
|
4.01
|
|
3.47
|
|
2.75
|
|
3.40
|
|
2.88
|
|
2.29
|
|
2.43
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Western Canada Select crude oil price
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(CDN$ per barrel)
|
|
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82.00
|
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65.42
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|
85.68
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|
91.34
|
|
85.81
|
|
75.84
|
|
69.62
|
|
86.31
|
|
79.25
|
|
67.64
|
|
71.70
|
|
60.73
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|
76.29
|
|
74.10
|
|
75.91
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WTI crude oil price (US$ per barrel)
|
|
|
93.06
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|
73.21
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|
97.60
|
|
103.06
|
|
98.72
|
|
98.01
|
|
97.56
|
|
105.82
|
|
94.14
|
|
94.30
|
|
94.09
|
|
88.17
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92.15
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93.30
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102.99
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US Activity |
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| |
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Average industry active land rig count (1) |
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1,789
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1,843
|
|
1,828
|
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1,781
|
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1,705
|
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1,685
|
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1,679
|
|
1,687
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|
1,686
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|
1,687
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1,852
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1,741
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|
1,837
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1,902
|
|
1,929
|
Average Trinidad active land rig count (2) |
|
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50
|
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52
|
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53
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|
47
|
|
48
|
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50
|
|
49
|
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51
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50
|
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49
|
|
57
|
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56
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55
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|
58
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58
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Canadian Activity |
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| |
| | | |
|
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| |
| | |
|
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Average industry utilization (3) |
|
|
44%
|
|
45%
|
|
46%
|
|
28%
|
|
58%
|
|
40%
|
|
43%
|
|
37%
|
|
18%
|
|
58%
|
|
39%
|
|
36%
|
|
42%
|
|
18%
|
|
65%
|
Average Trinidad utilization (4) |
|
|
52%
|
|
57%
|
|
61%
|
|
24%
|
|
68%
|
|
48%
|
|
48%
|
|
50%
|
|
24%
|
|
73%
|
|
52%
|
|
51%
|
|
58%
|
|
24%
|
|
77%
|
(1)
|
Baker Hughes rig counts (information obtained from Tudor Pickering Holt
& Company weekly rig roundup report).
|
(2)
|
Includes US and international rigs.
|
(3)
|
Canadian Association of Oilwell Drilling Contractors (CAODC)
utilization.
|
(4)
|
Based on drilling days (spud to rig release dates).
|
FOURTH QUARTER 2014 HIGHLIGHTS
-
Adjusted EBITDA in the fourth quarter was $77.3 million, down 7.7% from
the same quarter last year and up 19.7% from the third quarter of 2014.
Higher early termination and standby revenue received in the US and
international operations in the fourth quarter of 2013 increased
profitability compared to the current quarter. Excluding early
termination and standby revenue, adjusted EBITDA for the fourth quarter
was $71.0 million, compared to $57.2 million for the fourth quarter of
2013. Higher activity for land drilling rigs in Canada and the US
contributed to improved profitability. In addition, the joint venture
contributed $0.5 million in adjusted EBITDA compared to $(0.8) million
in the fourth quarter of 2013.
-
Operating income - net percentage was 35.6% in the fourth quarter of
2014, down from 47.0% in the fourth quarter of 2013 and up from 34.7%
in the third quarter of 2013. Operating income - net percentage
decreased largely as a result of factors affecting adjusted EBITDA
discussed above. Excluding early termination and standby revenue for
both quarters, operating income - net percentage was 34.2% for the
fourth quarter of 2014, down 5.6% from the prior year.
-
Net loss for the fourth quarter was $13.5 million in 2014 compared to
net earnings of $28.7 million in the same period in the prior year.
The decrease in net earnings was largely driven by an impairment
expense of $56.9 million recognized in the Canadian and US and
international divisions, along with higher depreciation and
amortization expense. The decrease was partly offset by the net impact
of the items affecting adjusting EBITDA discussed above and lower
income taxes.
-
Adjusted net earnings in the fourth quarter was $23.6 million, down $7.7
million from the fourth quarter of 2013. The decrease was a result of
factors impacting adjusted EBITDA noted above along with increased
depreciation resulting from higher activity levels.
-
On December 12, 2014, Trinidad amended and extended its credit facility,
including additional commitments under the US dollar denominated
revolving facility. The new credit facility includes a Canadian
revolving facility of C$200 million (previously C$200 million) and a US
revolving facility of US$200 million (previously US$100 million) and
matures in December 2018. At December 31, 2014, $15.0 million had been
drawn on the Canadian facility and nothing drawn on the US facility.
-
On November 25, 2014 Trinidad implemented a normal course issuer bid
(NCIB) that authorizes Trinidad to purchase up to 12,299,009 common
shares. During the three months and year ended December 31, 2014,
Trinidad purchased and cancelled 3,038,060 common shares at an average
price of $5.42 per share for a total consideration of $16.5 million.
FULL YEAR 2014 HIGHLIGHTS
- Trinidad generated revenue of $941.3 million in 2014, up $95.4 million
and 11.3% from 2013. Revenue was positively impacted by higher activity
levels in the Canadian and US land drilling business combined with
dayrates that were largely similar to the prior year, a positive
foreign currency translation on Trinidad's US division, partly offset
by a weaker contribution from the barge operations. Additionally,
Trinidad's manufacturing division generated higher revenue due to
external new build construction in 2014, largely related to the joint
venture. In addition to the items noted above, revenue was negatively
impacted by the absence of the Company's coring rigs, which were sold
in 2013 and lower activity from the Mexican rigs.
-
Overall operating income - net percentage was 35.7% in 2014 compared to
41.6% in 2013. Profitability lowered in the current year largely as a
result of lower early termination and standby revenue received in 2014
compared to 2013, along with higher manufacturing activity. The
manufacturing division typically generates lower margins than
Trinidad's drilling operations as the external new builds are
constructed for Trinidad's joint venture company and joint venture
partner at cost plus a small margin. In addition, Trinidad received
higher early termination and standby revenue in 2013; this revenue has
no associated costs and increases profitability. Excluding early
termination and standby revenue, overall operating income - net
percentage was 34.6% in 2014, compared to 39.1% in 2013. Profitability
was negatively impacted by higher reactivation and rig deployment costs
experienced in the second and third quarters of 2014, as Trinidad
reactivated and moved rigs to meet customer demand.
-
Adjusted EBITDA was $252.0 million in 2014, down $18.4 million or 6.8%,
from the previous year. Adjusted EBITDA decreased in the current year
as a result of lower operating income due to the factors discussed in
the first two points above. In addition, higher general and
administrative expenses (excluding share-based payment expense)
associated with the joint venture expansion negatively impacted
adjusted EBITDA in the current year. Excluding early termination and
standby revenue, adjusted EBITDA for 2014 was $1.6 million higher than
2013.
-
Net earnings were $6.6 million or $0.05 per share (diluted), down $64.4
million compared to last year. In addition to the items impacting
adjusted EBITDA discussed above, net earnings lowered as a result of an
impairment expense of $77.5 million, from assets deemed no longer
suitable for Trinidad's operations or held at a value higher than their
recoverable amount given the change in customer demand and lower
commodity prices. In addition, higher depreciation and amortization
expenses and foreign exchange lowered net earnings in 2014. Offsetting
this were lower income taxes, lower share-based payment expenses, and a
gain on sale of property and equipment.
-
Adjusted net earnings decreased by $24.5 million compared to the prior
year, with adjusted net earnings per share (diluted) decreasing $0.25
per share, for the same reasons noted for adjusted EBITDA.
-
On December 12, 2014, Trinidad amended and extended its credit facility,
including additional commitments under the US dollar denominated
revolving facility. The new credit facility includes a Canadian
revolving facility of C$200 million (previously C$200 million) and a US
revolving facility of US$200 million (previously US$100 million) and
matures in December 2018. At December 31, 2014, $15.0 million had been
drawn on the Canadian facility and nothing was drawn on the US
facility.
Canadian Operations
| |
|
|
| |
|
|
| Three months ended December 31, |
| For the years ended December 31, |
($ thousands except percentage and operating data)
| 2014 |
2013 (4) |
% Change
|
| 2014 |
2013 (4) |
% Change
|
Operating revenue (1) | 87,102 |
73,663
|
18.2
|
| 312,871 |
297,696
|
5.1
|
Other revenue
| 35 |
64
|
(45.3)
|
| 1,295 |
125
|
936.0
|
| 87,137 |
73,727
|
18.2
|
| 314,166 |
297,821
|
5.5
|
Operating costs (1) | 47,342 |
40,508
|
16.9
|
| 178,209 |
170,934
|
4.3
|
Operating income (3) | 39,795 |
33,219
|
19.8
|
| 135,957 |
126,887
|
7.1
|
Operating income - net percentage (3) | 45.7% |
45.1%
|
|
| 43.3% |
42.6%
|
|
|
|
|
|
|
|
|
|
Operating days (3) | 3,271 |
2,935
|
11.5
|
| 12,203 |
11,585
|
5.3
|
Drilling days (3) | 3,003 |
2,674
|
12.3
|
| 11,204 |
10,659
|
5.1
|
Rate per operating day (CDN$) (3) | 26,624 |
25,102
|
6.1
|
| 25,638 |
24,892
|
3.0
|
Utilization rate - operating day (3) | 62% |
52%
|
18.6
|
| 57% |
53%
|
8.5
|
Utilization rate - drilling day (3) | 57% |
48%
|
19.6
|
| 52% |
48%
|
7.6
|
CAODC industry average (2) | 45% |
43%
|
4.7
|
| 44% |
40%
|
10.0
|
| |
|
|
| |
|
|
Number of drilling rigs at period end
| 53 |
61
|
(13.1)
|
| 53 |
61
|
(13.1)
|
Number of coring and surface rigs
| |
|
|
| |
|
|
at period end
| - |
-
|
-
|
| - |
-
|
-
|
(1)
|
Operating revenue and operating costs for the three months ended
December 31, 2014 and 2013 exclude third party recovery and third party
costs of $10.8 million and $8.5 million, respectively.
|
(2)
|
CAODC industry average is based on drilling days divided by total days
available.
|
(3)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
(4)
|
During the prior year, Trinidad's Canadian operations included the
Canadian manufacturing division. Effective January 1, 2014, Trinidad
has re-evaluated operating segments. Management has determined that the
Manufacturing operations is considered a separate operating segment.
All prior period segmented information has been reclassified to conform
to this new presentation.
|
Fourth Quarter 2014
During the fourth quarter of 2014, revenue in Trinidad's Canadian
operations increased by $13.4 million and 18.2% compared to the same
quarter of 2013.
Revenue increased in the fourth quarter largely as a result of a change
in rig mix, higher activity and dayrates compared to the prior year. In
the fourth quarter, dayrates were $1,522 per day higher than the same
quarter last year, reflecting improved industry conditions over the
past year and an increase to wage rates in the third quarter of 2014.
Throughout 2014 industry conditions improved and customer demand
increased. This strength continued into the fourth quarter; however,
as a result of weakening commodity prices, indications of softening
demand began to be felt towards the end of the quarter. Utilization in
the fourth quarter of 2014 averaged 62%, up from 52% in the same
quarter last year due to increased demand. The Canadian operations
recorded an additional 336 operating days in the fourth quarter
compared to the same period last year, as rigs moved into the Canadian
operations in previous quarters of 2014 were in greater demand, and
more than compensated for the days lost on decommissioned rigs.
Operating income in the fourth quarter increased by $6.6 million
compared to the same quarter last year reflecting higher revenue
generation in the current quarter. Operating margin - net percentage
improved in the quarter, when compared to the prior year, due to higher
revenue generation and the Company's continued focus on cost
containment.
When compared to the third quarter of 2014, operating income increased
by $3.0 million and 8.1%, and operating income - net percentage
increased to 45.7% from 43.5% from the third quarter. The fourth
quarter is typically marked by above average utilization as customers'
programs increase leading into the winter drilling season. Towards the
end of the fourth quarter, Trinidad noted that demand was softening as
commodity prices fell. This was reflected in lower operating days in
the fourth quarter compared to the third quarter of 2014. The impact
of lower operating days was offset by an increase of $1,955 per day in
dayrates over the third quarter. Dayrates increased in the current
quarter as a result of industry wage increases, a change in rig mix
with more high specification rigs working and revenue from winter
drilling equipment. Operating costs were consistent with the previous
quarter.
Full Year 2014
Trinidad's Canadian operations demonstrated strong performance in 2014,
recording higher levels of operating revenue and operating income
compared to 2013. The division's improved performance was mainly driven
by higher utilization, dayrates and the addition of high specification
rigs. These improvements were a reflection of strong industry
conditions experienced through the year; although softening in the
market was noted towards the end of the year as commodity prices
declined. In the second and third quarters of 2014, Trinidad moved rigs
into its Canadian operations to meet customer demand, changing the rig
mix to include more high performance equipment and increasing the
profitability and utilization of the Canadian fleet.
For the year ended December 31, 2014, operating revenue and operating
income increased from the same period in the prior year due to higher
utilization, dayrates and the addition of high specification rigs in
the second half of the year. This impact was slightly offset by the
absence of the preset and coring rigs, which were sold in the third
quarter of 2013. These rigs generated $9.3 million in operating revenue
in the first half of 2013 compared to nil in the current year.
Operating days and utilization were higher than the prior year, driven
by the high-graded fleet and improved industry demand.
Operating income - net percentage increased during the year driven by
improved profitability from the high-graded fleet, partially offset by
weaker customer demand in the oil sands sector in the first quarter of
2014. In addition, the Company's continued focus on cost containment
reduced operating costs per day.
Trinidad's Canadian rig count totaled 53 rigs at the end of 2014, eight
fewer than at the end of 2013. During the year, the Company reviewed
its fleet and identified 13 lower specification rigs to be removed from
its fleet and decommissioned. In the current market conditions, the
Company deemed that these rigs were no longer competitive, and were not
economical to upgrade. The Company has recognized impairment expense
of $33.8 million as a result of these reviews. Earlier in 2014, the
Company relocated two rigs from its US operations and three rigs from
its Mexican operations to its Canadian operations. The rigs from Mexico
were being retrofitted with top drives and other upgrades, with one rig
returning to operations in the fourth quarter of 2014 and the remaining
two being available to drill in 2015.
United States and International Operations
| |
|
|
| |
|
|
| Three months ended December 31, |
| For the years ended December 31, |
($ thousands except percentage and operating data)
| 2014 |
2013 (3) |
% Change
|
| 2014 |
2013 (3) |
% Change
|
Operating revenue (1) | 128,597 |
135,002
|
(4.7)
|
| 480,240 |
490,375
|
(2.1)
|
Other revenue
| 239 |
521
|
(54.1)
|
| 451 |
594
|
(24.1)
|
| 128,836 |
135,523
|
(4.9)
|
| 480,691 |
490,969
|
(2.1)
|
Operating costs (1) | 77,535 |
69,942
|
10.9
|
| 308,533 |
288,085
|
7.1
|
Operating income (1) | 51,301 |
65,581
|
(21.8)
|
| 172,158 |
202,884
|
(15.1)
|
Operating income - net percentage (2) | 39.8% |
48.4%
|
|
| 35.8% |
41.3%
|
|
|
|
|
|
|
|
|
|
Land Drilling Rigs | |
|
|
| |
|
|
Operating days (2) | 4,820 |
4,470
|
7.8
|
| 18,478 |
18,234
|
1.3
|
Drilling days (2) | 4,157 |
3,852
|
7.9
|
| 16,038 |
15,841
|
1.2
|
Rate per operating day (CDN$) (2) | 25,150 |
27,243
|
(7.7)
|
| 23,873 |
23,951
|
(0.3)
|
Rate per operating day (US$) (2) | 22,476 |
26,213
|
(14.3)
|
| 21,749 |
23,381
|
(7.0)
|
Utilization rate - operating day (2) | 97% |
71%
|
35.8
|
| 87% |
73%
|
18.4
|
Utilization rate - drilling day (2) | 84% |
62%
|
36.4
|
| 75% |
64%
|
17.5
|
Number of drilling rigs at period end
| 47 |
64
|
(26.6)
|
| 47 |
64
|
(26.6)
|
| |
|
|
| |
|
|
Barge Drilling Rigs | |
|
|
| |
|
|
Operating days (2) | 212 |
394
|
(46.2)
|
| 1,049 |
1,703
|
(38.4)
|
Rate per operating day (CDN$) (2) | 36,616 |
34,810
|
5.2
|
| 37,655 |
32,388
|
16.3
|
Rate per operating day (US$) (2) | 32,795 |
33,490
|
(2.1)
|
| 34,424 |
31,605
|
8.9
|
Utilization rate - operating day (2) | 46% |
86%
|
(46.3)
|
| 57% |
93%
|
(38.9)
|
Number of barge drilling rigs at period end
| 2 |
2
|
-
|
| 2 |
2
|
-
|
Number of barge drilling rigs under
Bareboat Charter Agreements at period end
| 3 |
3
|
-
|
| 3 |
3
|
-
|
(1)
|
(1) Operating revenue and operating costs for the three months ended
December 31, 2014 and 2013 exclude third party recovery and third party
costs of $3.1 million and $5.3 million, respectively.
|
(2)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
(3)
|
During the prior year, Trinidad's US and international operations
included the US manufacturing division. Effective January 1, 2014,
Trinidad has re-evaluated operating segments. Management has determined
that the Manufacturing operations is considered a separate operating
segment. All prior period segmented information has been reclassified
to conform to this new presentation.
|
Fourth Quarter 2014
Revenue decreased in Trinidad's US and international operations in the
fourth quarter of 2014 compared to the fourth quarter of 2013 by $6.7
million or 4.9%. Revenue was lower in the current quarter largely due
to less early termination and standby revenue received than in the same
quarter last year. For the three months ended December 31, 2014, the US
and international division received US$5.6 million in early termination
and standby revenue compared to US$25.4 million in the fourth quarter
of 2013. Early terminations were received late in the fourth quarter
of 2014 and reflect the softening of demand in the industry towards the
end of the quarter.
Dayrates in the fourth quarter of 2014 were US$3,737 per day lower than
the fourth quarter of 2013 as a result of higher early termination and
standby revenue in 2013. Excluding the impact of early termination and
standby revenue in each quarter, dayrates were US$652 per day higher in
the current quarter. Higher normalized dayrates in 2014 were driven by
increased customer demand reflected in the higher operating days worked
by the land drilling rigs compared to the same period in the prior
year. Dayrates increased in the fourth quarter of 2014 compared to the
third quarter by US$1,384 per day. Higher early termination and standby
revenue drove US$1,155 per day of the increased dayrates in the fourth
quarter; however, dayrates also increased by US$229 per day as a result
of increased activity and demand, particularly early in the fourth
quarter. Activity levels in the fourth quarter of 2014 averaged 97%
compared to 71% for the same quarter last year and 96% for the third
quarter of 2014.
Operating days in the fourth quarter of 2014 were 350 days higher than
the same period in 2013 despite having fewer rigs in the quarter.
Higher activity levels year over year reflect increased customer demand
compared to the same quarter last year. However, similar to the
Canadian division, there was a softening in demand towards the end of
the fourth quarter driving 86 fewer operating days in the fourth
quarter compared to the third quarter.
Operating income and operating income - net percentage decreased in the
fourth quarter 2014 compared to the fourth quarter of 2013, but
increased from the third quarter of 2014, largely due to the early
termination and standby revenue discussed above. Excluding early
termination and standby revenue, operating income was $6.0 million
higher and operating income - net percentage was 0.9% higher than the
fourth quarter of 2013 as a result of the stronger demand in the base
land drilling business and the impact of the stronger US dollar
compared to 2013 impacting revenue and operating costs.
Dayrates for the Company's barge rigs decreased in the fourth quarter of
2014 by US$695 per day compared to the same period last year and
US$2,277 per day compared to the third quarter of 2014. The reduction
in dayrates reflects the overall softening in the market with
oversupply of barge rigs and the impact of lower commodity prices.
Utilization also dropped to 46% in the fourth quarter of 2014 compared
to 86% in the fourth quarter of 2013 and 73% in the third quarter of
2014. Lower activity levels in the current quarter resulted in lower
revenue and profitability.
Full Year 2014
Operating days and utilization increased in 2014 compared to the
previous year; however, lower early termination and standby revenue
than received in 2013 caused operating revenue to lower year over year.
Early termination and standby revenue in 2014 was $14.2 million (the
majority of which was recognized in the first quarter) compared to
$34.1 million in 2013 (the majority of which was recognized in the
fourth quarter). Excluding the impact of early termination and standby
revenue from both years, operating revenue in 2014 was $466.0 million,
$9.7 million higher than in 2013. In addition, operating revenue was
negatively impacted in 2014 by lower activity in the barge operations
and the impact from the Mexican rigs which were idle in 2014 but were
active in the first half of 2013. This was partly offset by the
favorable impact of foreign exchange.
In 2014, total operating days increased by 244 days in the US and
international division despite having fewer rigs in the fleet, driven
by the strong demand from customers for most of the year. For the year
ended December 31, 2014, dayrates decreased by US$1,632 per day
compared to the prior year. The decrease reflects the lower early
termination and standby revenue in the current year. Excluding the
impact of early termination and standby revenue, dayrates were US$455
per day lower in 2014 than 2013. Increasing demand in the second and
third quarters of 2014 in the US allowed Trinidad to re-activate its
lower specification rigs, changing the active rig mix and resulting in
a lower average dayrate compared to the previous periods. Additionally,
several high dayrate rigs that received termination revenue in late
2013 and early 2014 were not fully utilized in the first half of 2014,
lowering the overall average dayrate. These rigs had all returned to
work in the third quarter of 2014 and continued through the fourth
quarter. Softening in the market was noted towards the end of the year
consistent with the decline in commodity prices.
Operating income and operating income - net percentage declined in the
year. The decline in revenue, discussed above, was further impacted by
increased operating expenses. In the first half of 2014, Trinidad
re-activated a number of rigs in the US land drilling division, which
had significant repairs and maintenance costs for the Company. In
addition, Trinidad incurred costs related to the re-deployment of its
Mexican rigs to Canada in the current year. Excluding the impact of the
prior year's early termination and standby revenue, Mexican rig
redeployment costs and the barge operations, operating income - net
percentage for Trinidad's underlying US land drilling business was in
line with the prior year.
At December 31, 2014, Trinidad's US and international rig count totaled
47 rigs, 17 fewer rigs than at the same time last year. During 2014,
the Company reviewed its fleet and identified nine rigs to be removed
from the fleet and decommissioned, as it was determined that in the
current market conditions these rigs were no longer competitive and
were not economical to upgrade. The Company recognized impairment
expense of $22.9 million as a result of these reviews. In addition, the
rig count also lowered during 2014 as a result of two US rigs and three
Mexican rigs being redeployed to the Company's Canadian drilling
operations. The rig count was also reduced year over year as three rigs
were sold to the joint venture in the first quarter of 2014.
While Trinidad's barge drilling rigs had higher dayrates in the current
year compared to last year, an increase of US$2,819 per day, an
oversupply of barge rigs in the market and lower commodity prices had a
significant negative impact on activity levels in the second half of
the year. Lower activity levels resulted in much lower revenue
generation and profitability for the year. As a result of this, the
Company recorded an impairment expense totaling $20.8 million for the
year ended December 31, 2014 relating to the barge rigs and related
equipment.
Joint Venture Operations
Amounts are presented at 100% of the value included in the statement of
operations and comprehensive income for Trinidad Drilling International
(TDI); Trinidad owns 60% of the shares of TDI.
| |
|
|
| |
|
|
| Three months ended December 31, |
| For the years ended December 31, |
($ thousands except percentage and operating data)
| 2014 |
2013
|
% Change
|
| 2014 |
2013
|
% Change
|
Operating revenue
| 17,839 |
-
|
-
|
| 42,428 |
-
|
-
|
Other revenue
| - |
-
|
-
|
| - |
-
|
-
|
| 17,839 |
-
|
-
|
| 42,428 |
-
|
-
|
Operating costs
| 11,666 |
-
|
-
|
| 26,149 |
46
|
N/A
|
Operating income (1) | 6,173 |
-
|
-
|
| 16,279 |
(46)
|
N/A
|
Operating income - net percentage (1) | 34.6% |
-
|
|
| 38.4% |
-
|
|
| |
|
|
| |
|
|
Number of drilling rigs at period end
| 6 |
-
|
100.0
|
| 6 | - |
100.0
|
Number of active drilling rigs at period end
| 4 |
-
|
100.0
|
| 4 |
-
|
100.0
|
(1)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
Fourth Quarter 2014
For the three months ended December 31, 2014, TDI recorded operating
income and operating income - net percentage of $6.2 million and 34.6%,
respectively. At December 31, 2014, TDI had four rigs operating in
Saudi Arabia and had begun mobilizing two rigs to location in Mexico.
As with any operations that are in initial start-up phase, economies of
scale are gained as additional rigs are added to the operations and
more normalized revenue and costs are established. Trinidad anticipates
that by the second quarter of 2015, the joint venture will have four
rigs operating in Saudi Arabia and four rigs operating in Mexico, and
that revenue and costs will begin to better demonstrate the future
profitability of the joint venture once all rigs are operational.
During the three months ended December 31, 2014, Trinidad recorded a
gain from investment in joint venture of $1.4 million, reflecting
Trinidad's share of TDI's net earnings during the period. The
operating income of TDI noted above was partly offset by general and
administration and depreciation and amortization expenses. For the
three months ended December 31, 2014, the adjusted EBITDA from
investment in joint venture was $0.7 million, which is $1.6 million
higher than the same period in the prior year.
Full Year 2014
During 2013, Trinidad signed a joint venture agreement with Halliburton
with a right of first look at all drilling projects outside of Canada
and the United States. The joint venture currently has operations in
Saudi Arabia and Mexico. Additionally, the joint venture continues to
look into future growth opportunities in other international markets.
The joint venture conducts business under the name Trinidad Drilling
International (TDI) through separately incorporated entities.
Trinidad owns 60% of the shares of TDI, and each of Trinidad and
Halliburton have equal voting rights with respect to the operations of
the company. TDI is accounted for using the equity method of
accounting, whereby Trinidad takes 60% of the net income recorded as
(gain) loss from investment in joint venture.
During the year ended December 31, 2014, TDI took ownership of three
upgraded rigs purchased from Trinidad's US land drilling division and
three new build rigs purchased from Trinidad's manufacturing division.
Four of these rigs were drilling in 2014, with two rigs expected to
begin operations in the first half of 2015 in Mexico.
For the year ended December 31, 2014, TDI recorded operating income and
operating income - net percentage of $16.3 million and 38.4%,
respectively. As at December 31, 2014, TDI had four rigs drilling in
Saudi Arabia, with two rigs mobilizing to Mexico. Each of the rigs in
Mexico will be high performance, 3,600 horsepower, AC, walking rigs,
operating under three-year, take-or-pay contracts with an optional one
year extension.
The gain from investment in joint venture reflects Trinidad's share of
TDI's operating income, as noted above, less general and administrative
and depreciation and amortization expenses that largely offset the
operating income for the year ended December 31, 2014. For the year
ended December 31, 2014, the adjusted EBITDA from investment in joint
venture was $1.8 million, which is $2.6 million higher than 2013.
Manufacturing Operations
| |
|
|
| |
|
|
| Three months ended December 31, |
| For the years ended December 31, |
($ thousands except percentage and operating data)
| 2014 |
2013
|
% Change
|
| 2014 |
2013
|
% Change
|
Operating revenue (1) | 45,896 |
711
|
6,355.1
|
| 88,614 |
2,461
|
3,500.7
|
Other revenue
| 5 |
-
|
-
|
| 51 |
-
|
-
|
| 45,901 |
711
|
6,355.8
|
| 88,665 |
2,461
|
3,502.8
|
Operating costs (1) | 43,662 |
731
|
5,872.9
|
| 83,075 |
3,252
|
2,454.6
|
Operating income (2) | 2,239 |
(20)
|
11,295.0
|
| 5,590 |
(791)
|
806.7
|
Operating income - net percentage (2) | 4.9% |
(2.8%)
|
|
| 6.3% |
(32.1%)
|
|
(1)
|
For the three months ended December 31, 2014, excluded from operating
revenue and operating costs are downstream elimination entries of $62.1
million and $58.2 million, respectively (2013, nil and nil,
respectively). These entries remove Trinidad's percentage of profits
related to manufacturing of rigs for the joint venture.
|
(2)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
Fourth Quarter 2014
During the fourth quarter of 2014, Trinidad's manufacturing operations
mobilized two rigs to TDI for operation in Mexico. Trinidad expects
delivery of the remaining two rigs to Mexico in the first half of 2015.
A training rig being built for the joint venture partner is in the
final stages of completion and is expected to be delivered towards the
end of the first quarter of 2015.
For the fourth quarter, Trinidad recognized revenue and expenses related
to the Saudi Arabian and Mexican rig builds and the training rig,
compared to minimal external new build revenue or expenses recognized
during the same period in the prior year.
Full Year 2014
Effective January 1, 2014, Trinidad reviewed all existing operating
segments in order to better present the Company's operations based on
geographic location, services provided and any material changes to
operations. In the prior year, Trinidad's manufacturing operations
mainly performed work internally; therefore, the prior year operating
income includes a loss based on costs incurred by the manufacturing
division mainly related to raw materials consumed during construction
of rigs for internal use. Towards the end of 2013 and early 2014,
Trinidad's manufacturing division signed contracts to build rigs for
external parties, including the Company's joint venture partner and the
joint venture company.
As the manufacturing operations records operating revenue and costs,
management believes that presenting this division as a separate
operating segment from the Company's drilling operations is more useful
to users as it provides a more accurate representation of the margins
recorded on Trinidad's drilling operations. Prior period segmented
information has been reclassified to conform to the current period's
presentation.
The purpose of the manufacturing operations is to support rig builds,
rig maintenance and re-certifications for all of Trinidad's divisions,
including all associates and joint ventures. Therefore, management does
not commit to building a rig with the intention to earn significant
profits from this business. All contracts are based on a cost-plus
formula which is calculated in order for Trinidad to break even on rig
builds when all costs, including general and administrative expenses,
are factored in. Contracts are negotiated depending on the Company's
varying involvement, which can range from full scale design and
manufacturing to project management with a large degree of outsourcing.
Towards the end of 2013 and into 2014, Trinidad signed contracts for a
total of five new builds; one rig for the joint venture to operate in
Saudi Arabia, and four rigs for the joint venture to operate in Mexico.
Additionally, Trinidad had agreed to build a training rig for its joint
venture partner.
For the year ended December 31, 2014, Trinidad recognized revenues and
expenses related to the Saudi and Mexico rig builds and the training
rig, compared to minimal external new build revenues or expenses
recognized in 2013.
Trinidad's manufacturing operations delivered the new Saudi rig to the
joint venture in the third quarter of 2014 and delivered two new rigs
to Mexico at the end of 2014. The Company expects to deliver the
remaining two rigs for Mexico in the first half of 2015. The training
rig is nearly completed and is expected to be delivered in the first
quarter of 2015.
Trinidad also expects to complete three new rig builds under long-term,
take-or-pay contracts for its US operations during the first three
quarters of 2015. The rigs will be high performance Candrill, 1,500
horsepower, AC rigs with walking systems and 7,500 PSI circulating
systems.
FINANCIAL HIGHLIGHTS - QUARTERLY ANALYSIS
|
|
|
|
|
|
|
|
|
| 2014 |
2013
|
($ millions except per share data and operating data)
| Q4 |
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Revenue
| 276.4 |
244.5
|
168.9
|
251.5
|
224.6
|
208.7
|
165.4
|
247.2
|
Operating income (1) | 93.9 |
80.5
|
45.6
|
95.2
|
99.6
|
76.2
|
55.7
|
98.4
|
Operating income percentage (1) | 34.0% |
32.9%
|
27.0%
|
37.8%
|
44.4%
|
36.5%
|
33.6%
|
39.8%
|
Operating income - net percentage (1) | 35.6% |
34.7%
|
28.3%
|
41.1%
|
47.0%
|
38.5%
|
35.6%
|
43.3%
|
Net (loss) earnings
| (13.5) |
19.2
|
(24.8)
|
25.9
|
28.8
|
9.2
|
0.3
|
32.7
|
Adjustments for:
| |
|
|
|
|
|
|
|
|
Depreciation and amortization
| 34.0 |
33.4
|
27.3
|
30.3
|
29.5
|
30.1
|
27.6
|
29.9
|
|
Foreign exchange
| (0.1) |
0.5
|
1.5
|
3.1
|
0.9
|
0.4
|
-
|
-
|
|
Loss (gain) on sale of property and equipment
| 3.5 |
0.1
|
(1.3)
|
(10.5)
|
0.1
|
(0.1)
|
1.3
|
-
|
|
Impairment of property and equipment
| 56.9 |
-
|
20.6
|
-
|
-
|
-
|
0.1
|
-
|
|
(Income) loss from investment in Joint Venture
| (1.3) |
1.6
|
(0.4)
|
0.1
|
0.8
|
-
|
-
|
-
|
|
Finance costs
| 9.8 |
9.7
|
10.0
|
10.0
|
12.0
|
10.4
|
10.0
|
10.0
|
|
Income taxes
| (8.9) |
4.9
|
(7.2)
|
15.3
|
11.1
|
5.9
|
(1.6)
|
9.4
|
|
Interest Income
| - |
(0.1)
|
(0.1)
|
(0.2)
|
(0.1)
|
-
|
-
|
-
|
|
Other expense
| 0.6 |
(4.0)
|
5.3
|
5.5
|
1.5
|
5.9
|
2.2
|
2.8
|
|
Income taxes paid
| (0.3) |
(0.7)
|
(0.7)
|
(0.5)
|
(1.8)
|
-
|
(0.8)
|
(1.3)
|
|
Income taxes recovered
| 0.4 |
1.3
|
0.2
|
0.3
|
1.5
|
0.4
|
0.7
|
-
|
|
Interest paid
| (1.4) |
(19.5)
|
(0.5)
|
(18.7)
|
(1.1)
|
(18.4)
|
(0.7)
|
(18.6)
|
|
Interest received
| - |
0.1
|
0.1
|
0.2
|
0.1
|
-
|
-
|
-
|
Funds provided by operations (1) | 79.7 |
46.5
|
30.0
|
60.7
|
83.3
|
43.8
|
39.1
|
64.9
|
Net (loss) earnings per share (diluted)
| (0.10) |
0.14
|
(0.18)
|
0.19
|
0.23
|
0.08
|
-
|
0.27
|
Funds provided by operations per share (diluted)(1) | 0.58 |
0.34
|
0.22
|
0.44
|
0.67
|
0.36
|
0.32
|
0.54
|
(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
|
|
|
|
|
|
|
|
|
| 2014 |
2013
|
($ thousands except per share data and operating data)
| Q4 |
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
EBITDA (1) | 21,308 |
67,207
|
5,445
|
81,255
|
81,246
|
55,635
|
36,326
|
82,014
|
|
Per share (diluted) (2) | 0.15 |
0.48
|
0.04
|
0.58
|
0.65
|
0.46
|
0.30
|
0.68
|
Adjusted EBITDA (1) | 77,341 |
64,619
|
30,645
|
79,441
|
83,830
|
61,838
|
39,941
|
84,836
|
|
Per share (diluted) (2) | 0.56 |
0.47
|
0.22
|
0.57
|
0.68
|
0.51
|
0.33
|
0.70
|
Adjusted net (loss) earnings (1) | 23,565 |
14,602
|
(5,557)
|
27,746
|
31,221
|
15,449
|
2,631
|
35,534
|
|
Per share (diluted) (2) | 0.17 |
0.11
|
(0.04)
|
0.20
|
0.25
|
0.13
|
0.02
|
0.29
|
(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
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
2013
|
|
| Q4 |
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Land Drilling Market |
|
|
|
|
|
|
|
|
Operating days (1) |
|
|
|
|
|
|
|
|
|
Canada
| 3,271 |
3,424
|
1,431
|
4,077
|
2,935
|
3,018
|
1,434
|
4,198
|
|
United States and International
| 4,820 |
4,906
|
4,441
|
4,311
|
4,470
|
4,733
|
4,578
|
4,453
|
Rate per operating day (1) | |
|
|
|
|
|
|
|
|
Canada (CDN$)
| 26,624 |
24,669
|
26,338
|
25,415
|
25,102
|
23,686
|
25,511
|
25,401
|
|
United States and International (CDN$)
| 25,150 |
22,842
|
22,890
|
24,630
|
27,243
|
23,297
|
22,908
|
22,416
|
|
United States and International (US$)
| 22,476 |
21,092
|
20,819
|
22,641
|
26,213
|
22,460
|
22,436
|
22,487
|
Utilization rate - operating day (1) | |
|
|
|
|
|
|
|
|
Canada
| 62% |
66%
|
26%
|
74%
|
52%
|
54%
|
26%
|
79%
|
|
United States and International
| 97% |
96%
|
80%
|
76%
|
71%
|
76%
|
73%
|
72%
|
Number of drilling rigs at period end (3) | |
|
|
|
|
|
|
|
|
Canada
| 53 |
61
|
59
|
61
|
61
|
61
|
60
|
60
|
|
United States and International
| 47 |
54
|
56
|
61
|
64
|
68
|
68
|
68
|
|
Coring and surface casing rigs
| - |
-
|
-
|
-
|
-
|
-
|
15
|
15
|
|
Barge Drilling Market | |
|
|
|
|
|
|
|
|
Operating days (1) | 212 |
334
|
259
|
244
|
394
|
449
|
445
|
415
|
|
Rate per operating day (CDN$) (1) | 36,616 |
37,967
|
37,953
|
37,815
|
34,810
|
33,962
|
31,731
|
29,097
|
|
Rate per operating day (US$) (1) | 32,795 |
35,072
|
34,599
|
34,767
|
33,490
|
32,740
|
31,077
|
29,158
|
|
Utilization rate - operating day (1) | 46% |
73%
|
57%
|
54%
|
86%
|
97%
|
98%
|
92%
|
|
Number of barge drilling rigs at period end
| 2 |
2
|
2
|
2
|
2
|
2
|
2
|
2
|
|
Number of barge drilling rigs under
Bareboat Charter Agreements at period end
| 3 |
3
|
3
|
3
|
3
|
3
|
3
|
3
|
Joint Venture Operations (2) | |
|
|
|
|
|
|
|
|
Number of drilling rigs at period end
| 6 |
4
|
3
|
-
|
-
|
-
|
-
|
-
|
(1)
|
See Non-GAAP Measures Definitions and Additional GAAP Measures
Definitions section of this document for further details.
|
(2)
|
Trinidad is party to a joint venture with a wholly-owned subsidiary of
Halliburton. The rigs are owned by the joint venture.
|
(3)
|
Refer to the Results from Operations section for details on changes to
the rig count.
|
GENERAL AND ADMINISTRATIVE
|
|
|
|
|
|
|
|
| Three months ended December 31, |
| For the years ended December 31, |
($ thousands except percentage)
| 2014 |
2013
|
% Change
|
| 2014 |
2013
|
% Change
|
General and administrative (1) | 16,770 |
14,188
|
18.2
|
| 63,430 |
57,767
|
9.8
|
|
% of revenue
| 6.1% |
6.3%
|
|
| 6.7% |
6.8%
|
|
|
Share-based payment expense
| (3,458) |
1,572
|
(320.0)
|
| 765 |
12,410
|
(93.8)
|
|
Third party recoverable costs
| 492 |
827
|
(40.5)
|
| 1,454 |
827
|
75.8
|
|
Total general and administrative
| 13,804 |
16,587
|
(16.8)
|
| 65,649 |
71,004
|
(7.5)
|
|
% of revenue
| 5.0% |
7.4%
|
|
| 7.0% |
8.4%
|
|
(1)
|
General and administrative expenses excluding share-based payment
expense and third party recoverable costs. This number is discussed as
"Other G&A" per the below analysis.
|
For the year ended December 31, 2014, total general and administrative
(G&A) expenses decreased by $5.4 million or 7.5%, compared to 2013.
For the year ended December 31, 2014, other G&A expenses increased by
$5.7 million compared to the prior year as a result of costs associated
with establishing the Company's joint venture and subsequent
international growth. Costs related to professional fees,
administration salary expenses, office expenses, and travel expenses
have increased, as a result of the international expansion. This was
partly offset by a $1.9 million bad debt expense in the prior year
compared to nil in the current year.
Share-based payment expense decreased by $11.6 million year over year.
The decrease was mainly due to a lower share price at the end of 2014
which was slightly offset by an increase in the number of Performance
Share Units outstanding during the current year. In addition, in the
current year the number of Deferred Share Units declined mainly due to
units exercised by a retiring director. Annual grants for both
Performance Share Units and Deferred Share Units generally occur in the
first quarter of the current fiscal year.
Third party recoverable costs relate to costs incurred by Trinidad on
behalf of the joint venture. As these costs are fully recoverable,
Trinidad records a related revenue entry for this same amount, causing
no net income effect.
FINANCIAL SUMMARY
|
|
|
|
|
|
|
|
|
As at |
| December 31, |
|
|
December 31,
|
|
|
|
($ thousands)
|
| 2014 |
|
|
2013
|
|
|
$ Change
|
Working capital (1) |
| 166,502 |
|
|
303,120
|
|
|
(136,618)
|
|
| |
|
|
|
|
|
|
Senior Notes
|
| 519,759 |
|
|
476,107
|
|
|
43,652
|
Credit facility
|
| 15,000 |
|
|
-
|
|
|
15,000
|
|
| 534,759 |
|
|
476,107
|
|
|
58,652
|
Less: unamortized debt issue costs
|
| (6,951) |
|
|
(7,437)
|
|
|
486
|
Total long-term debt
|
| 527,808 |
|
|
468,670
|
|
|
59,138
|
Total long-term debt as a percentage of assets
|
| 27.2% |
|
|
25.6%
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Total assets
|
| 1,941,621 |
|
|
1,827,496
|
|
|
114,125
|
Total long-term liabilities
|
| 628,047 |
|
|
564,095
|
|
|
63,952
|
Total long-term liabilities as a percentage of assets
|
| 32.3% |
|
|
30.9%
|
|
|
|
|
| |
|
|
|
|
|
|
For the year ended December 31, |
| 2014 |
|
|
2013
|
|
|
$ Change
|
Cash provided by operations
|
| 156,519 |
|
|
299,013
|
|
|
(142,494)
|
Cash used by investing
|
| (331,421) |
|
|
(103,789)
|
|
|
(227,632)
|
Cash (used) provided by financing
|
| (29,484) |
|
|
64,507
|
|
|
(93,991)
|
(1)
|
See Non-GAAP Measures Definitions section of this document for further
details.
|
For the year ended December 31, 2014, working capital decreased by
$136.6 million when compared to the prior year, due to a decrease in
current assets of $108.2 million and an increase in current liabilities
of $28.4 million.
Current assets decreased during the year as cash balances received in
the prior year from a share issuance and customer deposits were used
for purchases of property and equipment, manufacturing of external rig
builds and to fund Trinidad's investment in TDI. Offsetting this are
increased accounts receivable from the increased activity in the land
drilling and manufacturing operations, inventory relating to progress
on external rig builds, and prepaid expenses for the long lead items
needed for rig builds.
Current liabilities increased in the current period mainly related to an
increase in accounts payable related to higher activity at year end for
the land drilling operations in Canada and the US, combined with
activity on external rig builds. Deferred revenue was reduced as the
manufacturing division moved closer to completing its external rig
builds and recognized revenue for amounts collected in advance.
Trinidad's total long-term debt balance increased by $59.1 million
compared to the prior year. This increase was largely due to the
increase in the Senior Notes at December 31, 2014, as a result of the
increase in the US to Canadian dollar exchange rate in 2014 versus the
prior year, as these notes are held in US funds. The Senior Notes are
translated at each period end, as such their value will fluctuate with
exchange rates. The Senior Notes are due January 15, 2019 and interest
is payable semi-annually in arrears on January 15 and July 15. In
addition, $15.0 million was drawn on Trinidad's Canadian dollar
revolving credit facility. No amounts were drawn at December 31, 2013.
On December 12, 2014, Trinidad amended and extended its credit facility,
including additional commitments under the US dollar denominated
revolving facility. The new credit facility includes a Canadian
revolving facility of C$200 million (previously C$200 million) and a US
revolving facility of US$200 million (previously US$100 million) and
matures on December 16, 2018 and is subject to annual extensions of an
additional year on each anniversary.
The Company continues to consider future capital commitments, and as
such, the unutilized facilities are expected to be used in the future
course of business. The Canadian and US revolving facilities require
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 EBITDA
ratio.
Capital expenditures
|
|
|
|
|
|
|
|
For the years ended December 31, |
|
|
| 2014 |
|
|
2013
|
New builds
|
|
|
| 154,754 |
|
|
26,944
|
Capital upgrades and enhancements
|
|
|
| 76,831 |
|
|
48,272
|
Maintenance and infrastructure
|
|
|
| 45,062 |
|
|
15,044
|
Total
|
|
|
| 276,647 |
|
|
90,260
|
During the year ended December 31, 2014, a total of $276.6 million was
spent on capital expenditures, compared to $90.3 million in the prior
year. The 2014 capital expenditures included new build capital
associated with the Company's Canadian new build that mobilized in the
beginning of 2015 and an existing rig purchased during the third
quarter of 2014. The purchased rig was moved to the Middle East and is
currently undergoing upgrades. The rig is being evaluated for several
opportunities and is expected to begin operations in 2015. In addition,
costs incurred to upgrade the three US land drilling rigs that were
sold to Trinidad's joint venture for operations in Saudi Arabia are
included in the new build capital expenditures. For 2014, Trinidad
spent $76.8 million on upgrading existing equipment including adding
moving systems, top drives and mud systems, to ensure the Company's
rigs remain competitive in the current market. In addition, Trinidad
spent $45.1 million on maintenance and infrastructure projects in 2014.
Trinidad spent $334.6 million, net of proceeds received from the sale of
rigs into the joint venture, on internal capital projects and its
portion of the joint venture projects. Costs related to the joint
venture rig build projects are accounted for as operating expenses in
Trinidad's manufacturing operations.
As of December 31, 2014, three upgraded rigs and one new build rig were
delivered to the joint venture for operations in Saudi Arabia. All four
rigs contributed to operations in the current quarter. Work also
progressed in the fourth quarter on the four joint venture rigs
Trinidad is constructing for operation in Mexico, with two being
delivered at the end of the fourth quarter.
In 2015, Trinidad expects to spend a total of approximately $175.0
million on capital projects. This total includes the completion of
three US new builds for Trinidad's fleet and two Mexican new builds for
the joint venture. Certain items purchased for new builds and upgrades
no longer required will be put into capital inventory for use in
Trinidad's existing fleet. In order to reduce capital outlays,
Trinidad and its customer have agreed to fulfill two US new build
commitments with rigs from Trinidad's existing fleet. In addition, the
Company has chosen to postpone upgrades previously scheduled for
existing rigs and will review this decision as market conditions change
throughout the upcoming year.
The 2015 capital budget is broken down as follows:
|
|
|
|
2015 Capital Budget ($ millions) |
|
| 2015 |
Growth Capital (Trinidad owned equipment)
|
|
|
| 90 |
Capital Inventory
|
|
|
| 35 |
Maintenance and infrastructure capital
|
|
|
| 10 |
|
|
|
| 135 |
Joint venture capital (Trinidad's 60% share)
|
|
|
| 40 |
Total 2015 capital budget
|
|
|
| 175 |
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 within the financial ratio covenants
under the revolving credit facility as reflected in the table below
under IFRS:
|
| |
|
| |
|
|
|
RATIO |
| December 31, |
|
|
December 31,
|
|
|
THRESHOLD
|
|
| 2014 |
|
|
2013
|
|
|
|
|
| |
|
|
|
|
|
|
Consolidated Senior Debt to Consolidated Bank EBITDA (1) |
| (0.18):1 |
|
|
0.00:1
|
|
|
3.00:1 maximum
|
Consolidated Total Debt to Consolidated Bank EBITDA (1) (2) |
| 1.93:1 |
|
|
1.80:1
|
|
|
4.00:1 maximum
|
Consolidated Bank EBITDA to Consolidated Cash Interest Expense (1) |
| 6.20:1 |
|
|
6.90:1
|
|
|
2.75:1 minimum
|
(1)
|
Please see the Non-GAAP Measures Definitions section of this document
for further details.
|
(2)
|
The 2013 ratio would have been 0.84:1 if it had been calculated in
accordance with the updated covenant calculation per the 2014 amended
and extended credit facility.
|
At year end, Total Debt to Bank EBITDA was 1.93 times, compared to 1.80
times at December 31, 2013. Total Debt to Bank EBITDA increased due to
lower adjusted EBITDA in the year ended December 31, 2014, compared to
the prior year and a higher debt balance at December 31, 2014, largely
due to a stronger US dollar translation.
Readers are cautioned that the ratios noted above do not have
standardized meanings as calculated under IFRS.
OUTLOOK
In late in 2014 and early 2015, weaker commodity prices have led to a
strong pull back in activity from customers across North America. In
Canada, there are 265 active rigs as of March 2, 2015, down 56% from
the same time last year and in the US the active rig count is at 1,208
rigs, down 30% from the same time last year. The impact of lower
customer demand was initially felt in the conventional, mechanical
style rigs; however, spot market rates and activity levels for high
performance equipment have also come under pressure in recent weeks.
Trinidad expects that lower commodity prices will increase the
importance of drilling efficiency and that demand for high performance
equipment, such as Trinidad's, should continue to outperform older,
less efficient equipment in 2015.
As a result of weaker market conditions, management has developed what
it believes to be a prudent capital program of $175 million for 2015.
This program includes the completion of US and joint venture new builds
carried over from 2014, some minor upgrades, capital inventory and
maintenance capital. Trinidad is focused on managing well costs for its
customers, lowering operating costs wherever possible, and leveraging
its high performance fleet to gain market share based on efficiency. As
part of pursuing these strategies, Trinidad has taken steps to lower
its cost structure and capital spending across the Company. Headcount
in all divisions has been reduced by a minimum of 20% for salaried
positions. In addition, all executives and directors have taken a 10%
reduction in salaries and board fees, and a company-wide average wage
roll back of 7% has been implemented.
Trinidad currently has more than 45% of its fleet under long-term,
take-or-pay contract with an average term remaining of approximately
1.5 years, providing the Company with a level of revenue stability.
The drilling industry is an inherently cyclical business, and Trinidad
is no stranger to the fluctuations of commodity prices. The Company has
worked hard over the last few years to position itself to withstand
these cycles and to take advantage of the opportunities they often
uncover. In the past few years, Trinidad has continued to enhance its
fleet, keeping it one of the most modern and technically advanced in
the industry. The Company has broadened its customer base to eliminate
any high levels of concentration and has added geographic diversity
with its international operations. In addition and perhaps most
importantly, Trinidad has paid off debt and improved its financial
flexibility. At year end 2014, Trinidad had Total Debt to Bank EBITDA
of 1.93 times and expects to remain well within its debt covenant of
4.00 times for the foreseeable future.
While Trinidad is not immune to the impacts of lower crude oil and
natural gas prices, the Company's strengthened balance sheet and focus
on high specification equipment increases the Company's stability.
Additionally, it provides the Company opportunities to move rigs to
areas of higher demand both in North America and internationally and
improve its ability to withstand periods of lower demand. Trinidad
expects to exit this down cycle positioned to perform strongly as
industry conditions improve.
CONFERENCE CALL
A conference call and webcast to discuss the results will be held for
the investment community on Thursday, March 5th, 2015 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 12:30 p.m. MT on March 5th, 2015 until
11:59 p.m. MTMarch 12th, 2015 by dialing (855) 859-2056 or (416)
849-0833 and entering replay access code 79726017.
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 and barge-drilling sectors of the North
American oil and natural gas industry with operations in Canada and the
United States. In addition, through a joint venture, Trinidad has the
opportunity to operate drilling rigs in other international markets
such as Saudi Arabia 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 |
| | December 31, |
|
|
December 31,
|
($ thousands) |
| | 2014 |
|
|
2013
|
|
| | |
|
|
|
Assets |
| | |
|
|
|
Current Assets
|
| | |
|
|
|
Cash and cash equivalents
|
| | 71,062 |
|
|
268,160
|
Accounts receivable
|
| | 223,750 |
|
|
166,557
|
Inventory
|
| | 29,618 |
|
|
8,474
|
Prepaid expenses
|
| | 19,755 |
|
|
5,557
|
Assets held for sale
|
| | - |
|
|
3,685
|
|
| | 344,185 |
|
|
452,433
|
|
| | |
|
|
|
Property and equipment
|
| | 1,325,730 |
|
|
1,275,465
|
Intangible assets and goodwill
|
| | 99,678 |
|
|
91,729
|
Deferred income taxes
|
| | 8,070 |
|
| - |
Investment in joint venture
|
| | 163,958 |
|
|
7,869
|
|
| | 1,941,621 |
|
|
1,827,496
|
|
| | |
|
|
|
Liabilities |
| | |
|
|
|
Current Liabilities
|
| | |
|
|
|
Accounts payable and accrued liabilities
|
| | 156,003 |
|
|
110,455
|
Dividends payable
|
| | 6,758 |
|
|
6,906
|
Deferred revenue and customer deposits
|
| | 14,922 |
|
|
31,952
|
|
| | 177,683 |
|
|
149,313
|
|
| | |
|
|
|
Long-term debt
|
| | 527,808 |
|
|
468,670
|
Deferred income taxes
|
| | 100,239 |
|
|
95,425
|
|
| | 805,730 |
|
|
713,408
|
|
| | |
|
|
|
Shareholders' Equity |
| | |
|
|
|
Common shares
|
| | 1,093,426 |
|
|
1,117,197
|
Contributed surplus
|
| | 59,005 |
|
|
50,607
|
Accumulated other comprehensive income
|
| | 62,470 |
|
|
4,404
|
Deficit
|
| | (79,010) |
|
|
(58,120)
|
|
| | 1,135,891 |
|
|
1,114,088
|
|
| | 1,941,621 |
|
|
1,827,496
|
|
|
|
|
|
|
|
Commitments and contingencies
|
| | |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, |
|
|
|
|
|
|
($ thousands) |
| 2014 |
|
|
|
2013
|
|
| |
|
|
|
|
Revenue |
| |
|
|
|
|
Oilfield service revenue
|
| 938,083 |
|
|
|
844,342
|
Other revenue
|
| 3,251 |
|
|
|
1,546
|
|
| 941,334 |
|
|
|
845,888
|
|
| |
|
|
|
|
Expenses |
| |
|
|
|
|
Operating expense
|
| 626,175 |
|
|
|
516,081
|
General and administrative
|
| 65,649 |
|
|
|
71,004
|
Depreciation and amortization
|
| 125,012 |
|
|
|
117,067
|
Foreign exchange
|
| 5,017 |
|
|
|
1,342
|
(Gain) loss on sale of property and equipment
|
| (8,238) |
|
|
|
1,341
|
Impairment of property and equipment
|
| 77,535 |
|
|
|
131
|
|
| 891,150 |
|
|
|
706,966
|
|
| |
|
|
|
|
(Gain) loss from investment in joint venture
|
| (19) |
|
|
|
768
|
Finance costs
|
| 39,531 |
|
|
|
42,368
|
Earnings before income taxes |
| 10,672 |
|
|
|
95,786
|
|
| |
|
|
|
|
Income taxes |
| |
|
|
|
|
Current
|
| 4,557 |
|
|
|
1,077
|
Deferred
|
| (481) |
|
|
|
23,757
|
|
| 4,076 |
|
|
|
24,834
|
Net earnings |
| 6,596 |
|
|
|
70,952
|
|
| |
|
|
|
|
Other comprehensive income |
| |
|
|
|
|
Foreign currency translation adjustment, net of income tax
|
| 58,066 |
|
|
|
38,807
|
|
| 58,066 |
|
|
|
38,807
|
Total comprehensive income |
| 64,662 |
|
|
|
109,759
|
Earnings per share |
| |
|
|
|
|
Net earnings |
| |
|
|
|
|
Basic
|
|
| 0.05 |
|
|
|
0.58
|
Diluted
|
|
| 0.05 |
|
|
|
0.58
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
| |
|
|
|
|
|
| other |
| |
| |
| | Common |
| Contributed |
| comprehensive |
| |
| Total |
($ thousands) | | shares |
| surplus |
| income (1) |
| (Deficit) |
| equity |
Balance at December 31, 2013
| |
1,117,197
|
|
50,607
|
|
4,404
|
|
(58,120)
|
|
1,114,088
|
Exercise of stock options
| | 807 |
| (215) |
| - |
| - |
| 592 |
Shares repurchased through normal course issuer bid
| | (24,578) |
| 8,090 |
| - |
| - |
| (16,488) |
Share-based payment expense
| | - |
| 523 |
| - |
| - |
| 523 |
Total comprehensive income
| | - |
| - |
| 58,066 |
| 6,596 |
| 64,662 |
Dividends
| | - |
| - |
| - |
| (27,486) |
| (27,486) |
Balance at December 31, 2014
| | 1,093,426 |
| 59,005 |
| 62,470 |
| (79,010) |
| 1,135,891 |
| | |
| |
| |
| |
| |
Balance at December 31, 2012
| |
952,043
|
|
50,245
|
|
(34,403)
|
|
(104,036)
|
|
863,849
|
Exercise of stock options
| |
142
|
|
(32)
|
|
-
|
|
-
|
|
110
|
Share-based payment expense
| |
-
|
|
394
|
|
-
|
|
-
|
|
394
|
Total comprehensive income
| |
-
|
|
-
|
|
38,807
|
|
70,952
|
|
109,759
|
Dividends
| |
-
|
|
-
|
|
-
|
|
(25,036)
|
|
(25,036)
|
Share issuance proceeds
| |
172,500
|
|
-
|
|
-
|
|
-
|
|
172,500
|
Share issuance costs
| |
(7,488)
|
|
-
|
|
-
|
|
-
|
|
(7,488)
|
Balance at December 31, 2013
|
|
1,117,197
|
|
50,607
|
|
4,404
|
|
(58,120)
|
|
1,114,088
|
(1)
|
Accumulated other comprehensive income consisted of the foreign currency
translation adjustment.
All amounts will be reclassified to profit or loss when specific
conditions are met.
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS | | |
|
| | | |
|
For the years ended December 31, | | |
|
($ thousands) |
|
| 2014 |
|
|
|
2013
|
| | |
|
| |
|
|
|
Cash provided by (used in) |
| | |
|
|
|
|
Operating activities |
| | |
|
|
|
|
Net earnings
|
| | 6,596 |
|
|
|
70,952
|
Adjustments for:
|
| | |
|
|
|
|
|
Depreciation and amortization
|
| | 125,012 |
|
|
|
117,067
|
|
Foreign exchange
|
| | 5,017 |
|
|
|
1,342
|
|
(Gain) loss on sale of property and equipment
|
| | (8,238) |
|
|
|
1,341
|
|
Impairment of property and equipment
|
| | 77,535 |
|
|
|
131
|
|
(Gain) loss from investment in joint venture
|
| | (19) |
|
|
|
768
|
|
Finance costs
|
| | 39,531 |
|
|
|
42,368
|
|
Income taxes
|
| | 4,076 |
|
|
|
24,834
|
|
Interest income
|
| | (412) |
|
|
|
(100)
|
|
Other (1) |
| | 7,358 |
|
|
|
12,410
|
|
Income taxes paid
|
| | (2,171) |
|
|
|
(3,873)
|
|
Income taxes recovered
|
| | 2,254 |
|
|
|
2,556
|
|
Interest paid
|
| | (39,978) |
|
|
|
(38,761)
|
|
Interest received
|
| | 412 |
|
|
|
100
|
Funds provided by operations
| |
| 216,973 |
|
|
|
231,135
|
Change in non-cash operating working capital
|
| | (60,454) |
|
|
|
67,878
|
Cash provided by operations
|
| | 156,519 |
|
|
|
299,013
|
|
|
| | |
|
|
|
|
Investing activities |
| | |
|
|
|
|
Purchase of property and equipment
| |
| (276,647) |
|
|
|
(90,260)
|
Proceeds from disposition of property and equipment
| |
| 137,170 |
|
|
|
13,467
|
Investment in joint venture
|
| | (170,427) |
|
|
|
(8,529)
|
Change in non-cash working capital
|
| | (21,517) |
|
|
|
(18,467)
|
Cash used by investing
|
| | (331,421) |
|
|
|
(103,789)
|
|
|
| | |
|
|
|
|
Financing activities |
| | |
|
|
| |
Proceeds from long-term debt
|
| | 15,000 |
|
|
|
39,257
|
Repayments of long-term debt
|
| | - |
|
|
|
(115,241)
|
Repurchase of shares
| |
| (16,488) |
|
|
|
-
|
Proceeds from exercise of options
|
| | 592 |
|
|
|
110
|
Dividends paid
|
| | (27,634) |
|
|
|
(24,172)
|
Gross proceeds from share issuance
|
| | - |
|
|
|
172,500
|
Share issuance costs
|
| | - |
|
|
|
(7,488)
|
Finance costs
|
| | (954) |
|
|
|
(459)
|
Cash (used) provided by financing
|
| | (29,484) |
|
|
|
64,507
|
|
|
| | |
|
|
|
|
Cash flow from operating, investing and financing activities
|
| | (204,386) |
|
|
|
259,731
|
Effect of translation of foreign currency cash
|
| | 7,288 |
|
|
|
3,496
|
(Decrease) increase in cash for the year
|
| | (197,098) |
|
|
|
263,227
|
|
|
| | |
|
|
|
|
Cash and cash equivalents - beginning of year
|
| | 268,160 |
|
|
|
4,933
|
Cash and cash equivalents - end of year
|
| | 71,062 |
|
|
|
268,160
|
(1)
|
Other includes share-based payment expense and elimination of downstream
transactions in the Manufacturing operations net earnings.
|
SEGMENTED INFORMATION
The following presents the result of Trinidad's operating segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For three months ended | | |
| United States / |
| |
| |
| |
| |
| |
December 31, 2014 | | Canadian |
| International |
| Manufacturing |
| Joint Venture |
| Inter-segment |
| |
| |
($ thousands) | | Operations |
| Operations |
| Operations |
| Operations (1) |
| Eliminations |
| Corporate |
| Total |
| | |
| |
| |
| |
| |
| |
| |
Operating revenue
| | 87,102 |
| 128,597 |
| 108,018 |
| - |
| - |
| - |
| 323,717 |
Other revenue
| | 35 |
| 263 |
| 5 |
| - |
| - |
| - |
| 303 |
Third party recovery
| | 10,839 |
| 3,141 |
| - |
| - |
| - |
| - |
| 13,980 |
General and administrative - third party recovery
| | - |
| - |
| - |
| - |
| - |
| 492 |
| 492 |
Inter-segment revenue
| | - |
| - |
| 52,352 |
| - |
| (52,352) |
| - |
| - |
Elimination of downstream transactions
| | - |
| (24) |
| (62,122) |
| - |
| - |
| - |
| (62,146) |
| | 97,976 |
| 131,977 |
| 98,253 |
| - |
| (52,352) |
| 492 |
| 276,346 |
Operating costs
| | 47,342 |
| 77,535 |
| 101,812 |
| - |
| - |
| - |
| 226,689 |
Third party costs
| | 10,839 |
| 3,141 |
| - |
| - |
| - |
| - |
| 13,980 |
Inter-segment operating
| | - |
| - |
| 52,352 |
| - |
| (52,352) |
| - |
| - |
Elimination of downstream transactions
| | - |
| - |
| (58,150) |
| - |
| - |
| - |
| (58,150) |
Operating income
| | 39,795 |
| 51,301 |
| 2,239 |
| - |
| - |
| 492 |
| 93,827 |
Depreciation and amortization
| | 12,321 |
| 21,209 |
| 407 |
| - |
| - |
| - |
| 33,937 |
Loss (gain) on sale of assets
| | 2,333 |
| 1,157 |
| (23) |
| - |
| - |
| - |
| 3,467 |
Elimination of downstream transactions
| | - |
| - |
| - |
| - |
| - |
| - |
| - |
Impairment of capital assets
| | 20,502 |
| 36,403 |
| - |
| - |
| - |
| - |
| 56,905 |
Impairment of intangible assets and goodwill
| | - |
| - |
| - |
| - |
| - |
| - |
| - |
| | 35,156 |
| 58,769 |
| 384 |
| - |
| - |
| - |
| 94,309 |
Segmented income (loss)
| | 4,639 |
| (7,468) |
| 1,855 |
| - |
| - |
| 492 |
| (482) |
Gain from investment in joint venture
| | - |
| - |
| - |
| (1,376) |
| - |
| - |
| (1,376) |
General and administrative
| | - |
| - |
| - |
| - |
| - |
| 13,312 |
| 13,312 |
General and administrative - third party costs
| | - |
| - |
| - |
| - |
| - |
| 492 |
| 492 |
Foreign exchange
| | - |
| - |
| - |
| - |
| - |
| (280) |
| (280) |
Finance costs
| | - |
| - |
| - |
| - |
| - |
| 9,808 |
| 9,808 |
Income taxes
| | - |
| - |
| - |
| - |
| - |
| (8,931) |
| (8,931) |
Net earnings (loss)
| | 4,639 |
| (7,468) |
| 1,855 |
| 1,376 |
| - |
| (13,909) |
| (13,507) |
| | |
| |
| |
| |
| |
| |
| |
|
Purchase of property and equipment
| | 30,404 |
| 42,997 |
| - |
| - |
| - |
| - |
| 73,401 |
(1)
|
The joint venture is recorded using the equity method of accounting. The
Company's share of individual assets and liabilities are recognized as
an investment on the consolidated statements of financial position, and
revenue and expenses are recognized with net earnings as income from
investment in joint venture on the consolidated statements of
operations and comprehensive income. The joint venture was effective
September 3, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For three months ended
| |
|
|
United States /
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
| |
Canadian
|
|
International
|
|
Manufacturing
|
|
Joint Venture
|
|
Inter-segment
|
|
|
|
|
($ thousands)
|
|
Operations
|
|
Operations
|
|
Operations
|
|
Operations (1) |
|
Eliminations
|
|
Corporate
|
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue
|
|
73,663
|
|
135,002
|
|
711
|
|
-
|
|
-
|
|
-
|
|
209,376
|
Other revenue
|
|
64
|
|
521
|
|
-
|
|
-
|
|
-
|
|
-
|
|
585
|
Third party recovery
|
|
8,480
|
|
5,295
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13,775
|
General and administrative - third party recovery
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
827
|
|
827
|
Inter-segment revenue
|
|
-
|
|
-
|
|
6,640
|
|
-
|
|
(6,640)
|
|
-
|
|
-
|
Elimination of downstream transactions
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
82,207
|
|
140,818
|
|
7,351
|
|
-
|
|
(6,640)
|
|
827
|
|
224,563
|
Operating costs
|
|
40,508
|
|
69,942
|
|
731
|
|
-
|
|
-
|
|
-
|
|
111,181
|
Third party costs
|
|
8,480
|
|
5,295
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13,775
|
Inter-segment operating
|
|
-
|
|
-
|
|
6,640
|
|
-
|
|
(6,640)
|
|
-
|
|
-
|
Elimination of downstream transactions
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Operating income (loss)
|
|
33,219
|
|
65,581
|
|
(20)
|
|
-
|
|
-
|
|
827
|
|
99,607
|
Depreciation and amortization
|
|
10,676
|
|
18,418
|
|
418
|
|
-
|
|
-
|
|
-
|
|
29,512
|
Loss (gain) on sale of assets
| |
104
|
|
(49)
|
|
(2)
|
|
-
|
|
-
|
|
-
|
|
53
|
Elimination of downstream transactions
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Impairment of capital assets
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Impairment of intangible assets and goodwill
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
10,780
|
|
18,369
|
|
416
|
|
-
|
|
-
|
|
-
|
|
29,565
|
Segmented income (loss)
|
|
22,439
|
|
47,212
|
|
(436)
|
|
-
|
|
-
|
|
827
|
|
70,042
|
Loss from investment in joint venture
|
|
-
|
|
-
|
|
-
|
|
762
|
|
-
|
|
-
|
|
762
|
General and administrative
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
15,760
|
|
15,760
|
General and administrative - third party costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
827
|
|
827
|
Foreign exchange
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
959
|
|
959
|
Finance costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
11,975
|
|
11,975
|
Income taxes
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
11,069
|
|
11,069
|
Net earnings (loss)
|
|
22,439
|
|
47,214
|
|
(436)
|
|
(762)
|
|
-
|
|
(39,763)
|
|
28,690
|
|
Purchase of property and equipment
|
|
3,151
|
|
35,037
|
|
1,723
|
|
-
|
|
-
|
|
-
|
|
39,911
|
(1)
|
The joint venture is recorded using the equity method of accounting. The
Company's share of individual assets and liabilities are recognized as
an investment on the consolidated statements of financial position, and
revenue and expenses are recognized with net earnings as income from
investment in joint venture on the consolidated statements of
operations and comprehensive income. The joint venture was effective
September 3, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended | | |
| United States / |
| |
| |
| |
| |
| |
December 31, 2014 | | Canadian |
| International |
| Manufacturing |
| Joint Venture |
| Inter-segment |
| |
| |
($ thousands) | | Operations |
| Operations |
| Operations |
| Operations (1) |
| Eliminations |
| Corporate |
| Total |
| | |
| |
| |
| |
| |
| |
| |
Operating revenue
| | 312,871 |
| 480,240 |
| 184,817 |
| - |
| - |
| - |
| 977,928 |
Other revenue
| | 1,295 |
| 475 |
| 51 |
| - |
| - |
| - |
| 1,821 |
Third party recovery
| | 39,784 |
| 16,574 |
| - |
| - |
| - |
| - |
| 56,358 |
General and administrative - third party recovery
| | - |
| - |
| - |
| - |
| - |
| 1,454 |
| 1,454 |
Inter-segment revenue
| | - |
| - |
| 102,870 |
| - |
| (102,870) |
| - |
| - |
Elimination of downstream transactions
| | - |
| (24) |
| (96,203) |
| - |
| - |
| - |
| (96,227) |
| | 353,950 |
| 497,265 |
| 191,535 |
| - |
| (102,870) |
| 1,454 |
| 941,334 |
Operating costs
| | 178,209 |
| 308,533 |
| 172,710 |
| - |
| - |
| - |
| 659,452 |
Third party costs
| | 39,784 |
| 16,574 |
| - |
| - |
| - |
| - |
| 56,358 |
Inter-segment operating
| | - |
| - |
| 102,870 |
| - |
| (102,870) |
| - |
| - |
Elimination of downstream transactions
| | - |
| - |
| (89,635) |
| - |
| - |
| - |
| (89,635) |
Operating income
| | 135,957 |
| 172,158 |
| 5,590 |
| - |
| - |
| 1,454 |
| 315,159 |
Depreciation and amortization
| | 44,603 |
| 78,820 |
| 1,589 |
| - |
| - |
| - |
| 125,012 |
Loss (gain) on sale of assets
| | 1,928 |
| (28,269) |
| (23) |
| - |
| - |
| - |
| (26,364) |
Elimination of downstream transactions
| | - |
| 18,126 |
| - |
| - |
| - |
| - |
| 18,126 |
Impairment of capital assets
| | 33,869 |
| 43,666 |
| - |
| - |
| - |
| - |
| 77,535 |
| | 80,400 |
| 112,343 |
| 1,566 |
| - |
| - |
| - |
| 194,309 |
Segmented income
| | 55,557 |
| 59,815 |
| 4,024 |
| - |
| - |
| 1,454 |
| 120,850 |
Gain from investment in joint venture
| | - |
| - |
| - |
| (19) |
| - |
| - |
| (19) |
General and administrative
| | - |
| - |
| - |
| - |
| - |
| 64,195 |
| 64,195 |
General and administrative - third party costs
| | - |
| - |
| - |
| - |
| - |
| 1,454 |
| 1,454 |
Foreign exchange
| | - |
| - |
| - |
| - |
| - |
| 5,017 |
| 5,017 |
Finance costs
| | - |
| - |
| - |
| - |
| - |
| 39,531 |
| 39,531 |
Income taxes
| | - |
| - |
| - |
| - |
| - |
| 4,076 |
| 4,076 |
Net earnings (loss)
| | 55,557 |
| 59,815 |
| 4,024 |
| 19 |
| - |
| (112,819) |
| 6,596 |
| | |
| |
| |
| |
| |
| |
| |
Purchase of property and equipment | | 134,943 |
| 141,540 |
| 164 |
| - |
| - |
| - |
| 276,647 |
(1)
|
The joint venture is recorded using the equity method of accounting. The
Company's share of individual assets and liabilities are recognized as
an investment on the consolidated statements of financial position, and
revenue and expenses are recognized with net earnings as income from
investment in joint venture on the consolidated statements of
operations and comprehensive income. The joint venture was effective
September 3, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
| |
|
|
United States /
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
| |
Canadian
|
|
International
|
|
Manufacturing
|
|
Joint Venture
|
|
Inter-segment
|
|
|
|
|
($ thousands)
|
|
Operations
|
|
Operations
|
|
Operations
|
|
Operations (1) |
|
Eliminations
|
|
Corporate
|
|
Total
|
| | |
| |
| |
| |
| |
| |
| |
Operating revenue
| |
297,696
|
|
490,375
|
|
2,461
|
|
-
|
|
-
|
|
-
|
|
790,532
|
Other revenue
| |
125
|
|
594
|
|
-
|
|
-
|
|
-
|
|
-
|
|
719
|
Third party recovery
| |
32,246
|
|
21,564
|
|
-
|
|
-
|
|
-
|
|
-
|
|
53,810
|
General and administrative - third party recovery
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
827
|
|
827
|
Inter-segment revenue
| |
-
|
|
-
|
|
33,014
|
|
-
|
|
(33,014)
|
|
-
|
|
-
|
Elimination of downstream transactions
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
| |
330,067
|
|
512,533
|
|
35,475
|
|
-
|
|
(33,014)
|
|
827
|
|
845,888
|
Operating costs
| |
170,934
|
|
288,085
|
|
3,252
|
|
-
|
|
-
|
|
-
|
|
462,271
|
Third party costs
| |
32,246
|
|
21,564
|
|
-
|
|
-
|
|
-
|
|
-
|
|
53,810
|
Inter-segment operating
| |
-
|
|
-
|
|
33,014
|
|
-
|
|
(33,014)
|
|
-
|
|
-
|
Elimination of downstream transactions
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Operating income (loss)
| |
126,887
|
|
202,884
|
|
(791)
|
|
-
|
|
-
|
|
827
|
|
329,807
|
Depreciation and amortization
| |
39,496
|
|
75,704
|
|
1,867
|
|
-
|
|
-
|
|
-
|
|
117,067
|
Loss (gain) on sale of assets
| |
412
|
|
936
|
|
(7)
|
|
-
|
|
-
|
|
-
|
|
1,341
|
Elimination of downstream transactions
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Impairment of capital assets
| |
131
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
131
|
| |
40,039
|
|
76,640
|
|
1,860
|
|
-
|
|
-
|
|
-
|
|
118,539
|
Segmented income (loss)
| |
86,848
|
|
126,244
|
|
(2,651)
|
|
-
|
|
-
|
|
827
|
|
211,268
|
Loss from investment in joint venture
| |
-
|
|
-
|
|
-
|
|
768
|
|
-
|
|
-
|
|
768
|
General and administrative
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
70,177
|
|
70,177
|
General and administrative - third party costs
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
827
|
|
827
|
Foreign exchange
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,342
|
|
1,342
|
Finance costs
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
42,368
|
|
42,368
|
Income taxes
| |
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
24,834
|
|
24,834
|
Net earnings (loss)
| |
86,848
|
|
126,244
|
|
(2,651)
|
|
(768)
|
|
-
|
|
(138,721)
|
|
70,952
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
| |
38,353
|
|
50,010
|
|
1,897
|
|
-
|
|
-
|
|
-
|
|
90,260
|
(1)
|
The joint venture is recorded using the equity method of accounting. The
Company's share of individual assets and liabilities are recognized as
an investment on the consolidated statements of financial position, and
revenue and expenses are recognized with net earnings as income from
investment in joint venture on the consolidated statements of
operations and comprehensive income. The joint venture was effective
September 3, 2013.
|
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, EBITDA
from investment in joint venture, Adjusted EBITDA, Adjusted net (loss)
earnings, working capital, Senior Debt to Bank EBITDA, Total Debt to
Bank EBITDA, Bank EBITDA to Cash Interest Expense, drilling days,
operating days, utilization rate - drilling day, utilization rate -
operating day, and rate per operating day or dayrate. 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 and amortized or how the results are taxed in various
jurisdictions.
EBITDA is derived from the consolidated statements of operations and
comprehensive income and is calculated as follows:
|
|
|
|
|
|
|
|
|
Three months ended
|
|
For the years ended
|
|
|
December 31,
|
|
December 31,
|
($ thousands)
| 2014 |
2013
|
| 2014 |
2013
|
Net (loss) earnings
| (13,507) |
28,690
|
| 6,596 |
70,952
|
Plus:
| |
|
| |
|
|
Finance costs
| 9,808 |
11,975
|
| 39,531 |
42,368
|
|
Depreciation and amortization
| 33,938 |
29,513
|
| 125,012 |
117,067
|
|
Income taxes
| (8,931) |
11,068
|
| 4,076 |
24,834
|
EBITDA
| 21,308 |
81,246
|
| 175,215 |
255,221
|
"EBITDA from investment in joint venture" provides an indication of the results generated by the Company's joint
venture operations prior to how these activities are financed, assets
are depreciated and amortized or how the results are taxed in various
jurisdictions.
EBITDA from investment in joint venture is derived from the consolidated
statements of operations and comprehensive income of the Trinidad
Drilling International (TDI) and is calculated as follows:
|
|
|
| |
|
|
|
Three months ended
|
|
For the years ended
|
|
|
December 31,
|
|
December 31,
|
($ thousands)
| 2014 |
2013
|
| 2014 |
2013
|
Gain (loss) from investment in joint venture
| 1,376 |
(762)
|
| 19 |
(768)
|
Plus:
| |
| |
|
|
Finance costs
| 34 |
-
|
| 34 |
-
|
|
Depreciation and amortization
| 1,672 |
-
|
| 2,916 |
-
|
|
Income taxes
| (2,562) |
-
|
| (1,449) |
-
|
EBITDA from investment in joint venture
| 520 |
(762)
|
| 1,520 |
(768)
|
"Adjusted EBITDA" is used by management and investors to analyze EBITDA (as defined
above) prior to the effect of foreign exchange, share-based payment
expense, impairment expenses and the sale of assets. Adjusted EBITDA
also takes into account the Company's portion of the principal
activities of the joint venture arrangement by removing the loss (gain)
from investment in joint venture and including Adjusted EBITDA from
investment in joint venture. Adjusted EBITDA is not intended to
represent net (loss) earnings as calculated in accordance with IFRS.
Adjusted 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, the
impact of foreign exchange, how the results are taxed in various
jurisdictions and effects of share-based payment expense.
|
|
|
| |
|
|
|
Three months ended
|
|
For the years ended
|
|
|
December 31,
|
|
December 31,
|
($ thousands)
| 2014 |
2013
|
| 2014 |
2013
|
EBITDA
| 21,308 |
81,246
|
| 175,215 |
255,221
|
Plus:
| |
|
| |
|
|
Loss (gain) on sale of property and equipment
| 3,466 |
53
|
| (8,238) |
1,341
|
|
Impairment of property and equipment
| 56,905 |
-
|
| 77,535 |
131
|
|
Share-based payment expense
| (3,458) |
1,572
|
| 765 |
12,410
|
|
Foreign exchange
| (281) |
959
|
| 5,017 |
1,342
|
|
(Gain) loss from investment in joint venture
| (1,376) |
762
|
| (19) |
768
|
Plus:
| |
|
| |
|
|
Adjusted EBITDA from investment in joint venture
| 771 |
(762)
|
| 1,771 |
(768)
|
Adjusted EBITDA
| 77,341 |
83,830
|
| 252,046 |
270,445
|
"Adjusted EBITDA from investment in joint venture" is used by management and investors to analyze EBITDA (as defined
above) prior to the effect of foreign exchange, share-based payment
expense, impairment expense and the sale of assets. Adjusted EBITDA
from investment in joint venture is not intended to represent net
(loss) earnings as calculated in accordance with IFRS. Adjusted EBITDA
from investment in joint venture provides an indication of the results
generated by TDI's principal business activities prior to how these
activities are financed, assets are depreciated, amortized and
impaired, the impact of foreign exchange, how the results are taxed in
various jurisdictions and effects of share-based payment expense.
Adjusted EBITDA from investment in joint venture is calculated as
follows:
|
|
|
|
| |
|
|
|
Three months ended
|
|
For the years ended
|
|
|
December 31,
|
|
December 31,
|
($ thousands)
| 2014 |
2013
|
| 2014 |
2013
|
EBITDA from investment in joint venture
| 520 |
(762)
|
| 1,520 |
(768)
|
Plus:
| |
|
| |
|
|
Foreign exchange
| 257 |
-
|
| 251 |
-
|
Adjusted EBITDA from investment in joint venture
| 771 |
(762)
|
| 1,771 |
(768)
|
"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, any gains or losses on the sale of assets in the period and
impairment charges, including taking into account the tax effects of
these items. This measure is not intended to represent net earnings as
calculated in accordance with IFRS. Adjusted net earnings is a useful
measure because it provides an indication of results of the Company's
principal business activities before consideration of fluctuations in
foreign exchange gains and losses, impairment and share-based payment
expenses, which are not consistently incurred period over period.
Adjusted net earnings is calculated as follows:
|
|
|
| |
|
|
|
Three months ended
|
|
For the years ended
|
|
|
December 31,
|
|
December 31,
|
($ thousands)
| 2014 |
2013
|
| 2014 |
2013
|
Net (loss) earnings
| (13,507) |
28,690
|
| 6,596 |
70,952
|
Plus:
| |
|
| |
|
|
Share-based payment expense
| (3,458) |
1,572
|
| 765 |
12,410
|
|
Foreign exchange
| (281) |
959
|
| 5,017 |
1,342
|
|
Impairment of property and equipment
| 56,905 |
-
|
| 77,535 |
131
|
|
(Gain) loss on sale of property and equipment
| 3,466 |
-
|
| (8,238) |
-
|
|
Tax adjustment
| (19,560) |
-
|
| (21,319) |
-
|
Adjusted net earnings
| 23,565 |
31,221
|
| 60,356 | 84,835 |
"Working capital" is used by management and the investment community to analyze the
operating liquidity available to the Company.
"Senior Debt to Bank EBITDA" is defined as the consolidated balance of the revolving facility and
other debt secured by a lien at quarter end to consolidated Bank EBITDA
for the trailing 12 months (TTM). Bank EBITDA used in this financial
ratio is calculated as EBITDA plus impairment expense, loss (gain) on
sale of property and equipment, loss (gain) from investment in joint
venture, share-based payment expense and unrealized foreign exchange.
"Total Debt to Bank 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 less unrestricted cash in excess of $10.0 million, to
consolidated Bank EBITDA for the TTM. Bank EBITDA used in this
financial ratio is calculated as EBITDA plus impairment expense, loss
(gain) on sale of property and equipment, loss (gain) from investment
in joint venture, share-based payment expense and unrealized foreign
exchange.
"Bank EBITDA to Cash Interest Expense" is defined as the consolidated Bank EBITDA for TTM to the cash
interest expense on all debt balances for TTM. Bank EBITDA used in
this financial ratio is calculated as EBITDA plus impairment expense,
loss (gain) on sale of property and equipment, loss (gain) from
investment in joint venture, 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 divided by total available rig days.
"Rate per operating day" or "Dayrate" 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 MD&A that are not defined terms under IFRS to
assess performance. Management believes that these measures provide
useful supplemental information to investors, and provide the reader a
more accurate reflection of our industry. 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, which is primarily made up of highly liquid balances.
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 (loss) 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, including third party recovery and third party
costs, as well as inter-segment revenue and inter-segment operating
costs. 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 excluding third party recovery and third party
costs, as well as inter-segment revenue and inter-segment operating
costs, as these revenues and expenses do not have an effect on
consolidated net (loss) earnings. 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 less third party G&A expenses
divided by revenue net of operating and G&A third party costs.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements and
forward-looking information (collectively, "forward-looking
information") within the meaning of applicable Canadian securities
laws. The use of any of the words "expect", "anticipate", "will",
"future" and similar expressions are intended to identify
forward-looking information. In particular, this press release
contains forward-looking information pertaining to Trinidad's plans,
strategies, objectives, expectations and intentions including, without
limitation: the manufacturing and upgrading of drilling rigs; the
timing of the delivery of the rigs into operation; Trinidad's and the
joint venture's growth opportunities; Trinidad's 2015 capital
expenditure program; Trinidad's expectation that it will fund the
building and upgrading of rigs through cash flow from operations; the
potential success of the joint venture; Trinidad's ability to lower its
cost structure and its ability to move rigs to the joint venture and
enter new international markets.
The forward-looking information included in this press release reflects
several factors, expectations and assumptions including, without
limitation: oil and gas industry conditions and oil and gas production
levels; commodity prices; supply and demand for commodities; scheduling
and timing of certain projects and Trinidad's and the joint venture's
strategy for growth; capital expenditure programs, cost structure and
other expenditures by oil and gas exploration and production companies;
Trinidad's and the joint venture's future operating and financial
results; that Trinidad will continue to conduct its operations,
including with respect to rig design and manufacturing, in a manner
consistent with its past performance.
The forward-looking information included in this press release is not a
guarantee of future performance and should not be unduly relied upon.
Forward-looking information is based on current expectations, estimates
and projections that involve a number of risks and uncertainties, which
could cause actual results to differ materially from those anticipated
and described in the forward-looking information including, without
limitation: volatility in market prices for oil, natural gas and LNG;
liabilities inherent in the drilling and manufacturing industries,
including technical problems; competition for skilled personnel;
changes in general economic, market and business conditions; actions by
governmental or regulatory authorities including changes to tax or
environmental laws; the ability of Trinidad's customers to raise
capital and to continue with their drilling programs; increases and
overruns in construction costs; supply and demand for commodities; and
the risks inherent in Trinidad's ability to generate sufficient cash
flow from operations to meet its current and future obligations. Should
any one of a number of issues arise, Trinidad may find it necessary to
alter its current business strategy and/or capital expenditure program.
Additional risks that could impact the business and operations of
Trinidad are detailed under the heading "Risk Factors" in Trinidad's
annual information form for the year ended December 31, 2013. Trinidad
cautions that the foregoing list of risks and uncertainties is not
exhaustive. The forward-looking information contained in this press
release speaks only as of the date of this press release and Trinidad
assumes no obligation to publicly update or revise such forward-looking
information to reflect new events or circumstances, except as may be
required pursuant to applicable securities laws.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy the shares in any jurisdiction. The
shares offered will not be and have not been registered under the
United States Securities Act of 1933 and may not be offered or sold in
the United States or to a United States person, absent registration, or
an applicable exemption therefrom.
SOURCE Trinidad Drilling Ltd.
<p> Lyle Whitmarsh<br/> Chief Executive Officer </p> <p> Brent Conway<br/> President </p> <p> Lisa Ottmann<br/> Vice President, Investor Relations<br/> (403) 294-4401<br/> email: <a href="mailto:investors@trinidaddrilling.com">investors@trinidaddrilling.com</a> </p>