Trinidad Drilling has re-signed long-term, take-or-pay contracts with expanding gross margins on 24 existing rigs.
"Trinidad is known in the industry for its modern, technically advanced equipment that performs well in today's challenging drilling environment," said Lyle Whitmarsh, Trinidad's President and Chief Executive Officer. "Our ability to re-sign our equipment to multi-year, take-or-pay contracts and lock in improving market conditions reflects the ongoing demand for our equipment and our track record of high performance."
As a part of its strategy to manage cyclicality in the drilling industry, Trinidad maintains a blend of long-term and spot market exposure over its fleet. This blend provides revenue stability during weak industry conditions, while also allowing the Company to participate in the upside as conditions improve. In line with this strategy, Trinidad recently completed contract negotiations on 17 rigs which were due to expire at the end of 2011. These rigs have now been re-signed with the same customer for an additional three year term at 100% utilization at increased dayrates. The successful re-contracting of these rigs reflects the increasing demand for high quality drilling equipment such as Trinidad's. In addition, Trinidad has re-signed another seven rigs, including four rigs that will be moved to the Powder River basin in Wyoming, creating a new operating area for Trinidad. These seven rigs have also been contracted for three years at 100% utilization.
The re-contracted rigs were largely built over the past five years and backed by long-term, take-or-pay contracts associated with their construction. Trinidad's ability to extend its initial contracts reflects the high quality of its equipment and the top performance it has been able to provide its customers. It also demonstrates the ongoing adaptability of the equipment to existing and emerging development areas.
Including the rigs being constructed in 2011 and the re-signed contracts, Trinidad has 52% of its fleet under contract with an average term remaining of approximately 2.3 years. Following the completion of the rig build program, Trinidad will have a total of 122 drilling rigs with 56 rigs in Canada, 63 rigs in the US and 3 rigs in Mexico.
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