Trinidad Drilling Ltd. (Trinidad or the Company) has announced an award in Kuwait for two Trinidad Drilling International (TDI) joint venture rigs on a 5 year contract. Trinidad expects that the joint venture rigs will begin operating by late in the first quarter or early in the second quarter of 2019.
The contract has five-year, take-or-pay terms with an optional one-year extension, at the discretion of the customer. TDI will be reimbursed by the customer for the cost of relocating the two rigs from Mexico. The rigs will undergo capital upgrades of approximately US$22 million per rig (Trinidad's 60% portion), largely related to new well control equipment and mud systems.
Trinidad expects to fund the additional upgrade capital from cash in the TDI joint venture, as well as reinvested proceeds from the previously disclosed sale of TDI's three Saudi Arabian rigs. At March 31, 2018, TDI had approximately US$50 million of cash on hand, of which Trinidad's 60% share is US$30 million.
"Kuwait drills some of the most technical wells in the world and our high-quality rigs provided us with a significant competitive advantage in winning this contract," said Brent Conway, Trinidad's President and Chief Executive Officer. "Under the contract, we expect to deliver value for Trinidad's shareholders with improved international contract visibility, a strong return on capital and long-term, stable revenue."
In 2018, Trinidad expects to fund its existing capital programme through cash flow generated from operations, the proceeds from the expected sale of unused facilities, and cash from the recent sale of its Saudi Arabian rigs, which TDI anticipates distributing to its joint venture owners. Excess cash flow may be used to repay debt outstanding on the Company's credit facility.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/29062018/trinidad-awarded-contract-for-two-rigs-in-kuwait/