Trinidad Drilling said that two of its Trinidad Drilling International (TDI) joint venture rigs have won a five-year contract in Kuwait.
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.
Trinidad president and CEO Brent Conway said: “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.
“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 program 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.
Following the redeployment of the two rigs to Kuwait, TDI will have two rigs remaining in Mexico and one rig in Bahrain.
The rig located in Bahrain and one of the two Mexican rigs were recently re-activated and TDI expects that they will continue operating for the remainder of 2018.
TDI remains committed to its international operations, with a focus on Bahrain, Kuwait and Mexico.
Trinidad also has a wholly-owned rig located in the United Arab Emirates in addition to the Company’s North American fleet.
Source: Company Press Release