Trinidad Drilling could soon be forsale
Three weeks after announcing it would move two idle Canadian drilling rigs and three from Saudi Arabia to greener pastures in the United States, Trinidad Drilling Ltd. has put itself on the block.
The Calgary-based oil and gas drilling company said Tuesday it has appointed a committee to look at options, including a corporate sale or merger, because its share price doesn’t reflect what it believes is its true value.
Shares in Trinidad rose about seven per cent to $1.90 Tuesday after closing at $1.77 on the Toronto Stock Exchange Friday. The stock’s five-year high was $12.75 in June 2014.
The news comes as Canada’s oil and gas producers continue to budget for lower exploration and production spending this year than their American counterparts — Peters & Co. has estimated Canadian spending will fall six per cent this year, while U.S. spending rises 14 per cent.
In Canada, 288 of the 622 drilling rigs in the fleet were working in the most recent weekly report from the Canadian Association of Oilwell Drilling Contractors, up six per cent from 270 a year ago. In the U.S., there were 975 active rigs as of Friday, up 30 per cent from 751 a year ago, according to Baker Hughes.
Winter is the most active season for Canada’s drilling industry because the frozen ground permits access to more backcountry sites.
In an interview in late January, Trinidad CEO Brent Conway said his American customers in the prolific Permian Basin in Texas are helping to pay relocation costs because they want to contract his rigs.
“What’s happening in the U.S? They’re lowering taxes, they ’re building pipelines and they ’re starting to export oil,” he said.
In Canada, he added, “we’ve raised taxes, we’re increasing costs because of labour laws that are changing, we aren’t building pipelines and we can’t get federal or provincial governments to do anything to help us.”
Following its redeployments, Trinidad said it would have 69 rigs in the U.S., 68 in Canada, six in Mexico and two in the Middle East.
The company refused further comment Tuesday.
In a news release, Trinidad said it is in a “strong financial position” with enough free cash flow to fund its $74-million 2018 capital program with access to additional credit.
In January, it announced it would reduce costs by cutting its head office workforce, lowering salaries and fees for executives and directors and reviewing underutilized facilities for possible sale.
In its fourth-quarter financial report last week, Canada’s largest drilling company, Precision Drilling Corp., said it expects further recovery in pricing for its rigs in the U.S. this year as activity levels rise, but it predicted little change in Canada.