Trinidad Drilling has entered into an agreement to sell its well servicing rigs and related equipment (TWS) to Central Alberta Well Services Corp. (CWC) for $38 million in cash, excluding positive working capital.
Well servicing has been an important part of Trinidad's operations for more than ten years and has provided a level of diversification as the Company has grown its contract drilling business. Trinidad now operates more than 120 drilling rigs across North America, providing broad geographic diversification and reducing the need for the diversification added by the well servicing division.
"As well servicing has become a less significant part of our overall business, we needed to invest capital to grow this division or to narrow our focus more tightly towards contract drilling," said Lyle Whitmarsh, Trinidad's President and Chief Executive Officer. "Our growth over past few years has largely been through adding deep, technically advanced drilling rigs and we have developed a reputation as an industry leader in this area. Our decision to sell our well servicing assets reflects our strategy to focus on the deep, modern contract drilling market where returns are generally stronger and where we see opportunities for future growth."
Trinidad's well servicing division has 22 well servicing rigs operating from three centers in Alberta. The well service fleet is made up of:
CWC has agreed to purchase all 22 of TWS's service rigs and anticipates that they will retain the vast majority of employees currently working for TWS. The sale is expected to close on June 15, 2011. Trinidad expects to use the proceeds from the sale to fund the growth of its deep, technically advanced drilling fleet or to reduce overall corporate indebtedness.
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