Trinidad, CanElson announce drilling merger
Combined company will have 163 land rigs after $505M deal
CALGARY — Trinidad Drilling Ltd. and CanElson Drilling Inc. announced Thursday a $505-million merger they say will give them muchneeded scale in the oilfield services sector.
“Our combined fleet will be one of the largest and most active in North America, with the third-largest fleet in Canada and the eighthlargest in the U.S.,” Trinidad CEO Lyle Whitmarsh said on a conference call announcing the deal.
The cash-plus-shares deal would see Trinidad acquire all the outstanding shares of CanElson, which had developed a large customer-base in Saskatchewan and west Texas oil and gas plays.
Trinidad, analysts noted, is primarily focused on deploying high-performance rigs in plays in Alberta and British Columbia and is not currently working in Saskatchewan. So, FirstEnergy Capital Corp. analyst Ian Gillies said in a research note, the acquisition “will open up a new area of operations for Trinidad.”
The combined company will have a fleet of 163 land drilling rigs, more than 35 per cent of them under contract, Whitmarsh said, at a time many oilfield services companies have been hardhit by a slowdown in demand for their work.
Trinidad and CanElson, both based in Calgary, have rolled back employee wages, cut staff and reduced spending as oilfield activity has plummeted following the rout in oil prices. The combined company, Whitmarsh said, will be able to trim an additional $10 million worth of costs if the deal gets shareholder approval in August.
Neither Whitmarsh nor CanElson CEO Randy Hawkings expected the merger would result in additional large-scale layoffs.