ENP Newswire - 08 August 2014
Release date- 07082014 - CALGARY - Trinidad Drilling Ltd. reported second quarter and year to date 2014 results.
The Company's results were impacted as rigs were re-activated to meet increasing demand, incurring additional costs and leading to lower adjusted EBITDA (1) in the current quarter.
'The second quarter was a transitional quarter for Trinidad,' said Lyle Whitmarsh, Trinidad's Chief Executive Officer. 'We are seeing growing demand across all areas of our operations and incurred higher costs in the quarter as we prepared the fleet for these improved industry conditions.
During the quarter, our US and international division moved rigs to new customers and locations, and had higher than usual repairs and maintenance costs as rigs were re-activated. Although these costs negatively affected the second quarter, we are already seeing the benefit as all of our US rigs are currently operating. We anticipate that Trinidad will perform well in the second half of 2014 as customers increasingly lock up existing rigs and demand for new equipment grows.'
The second quarter of 2014 was a transitional period for Trinidad. Each of the following factors had a significant impact on the Company:
Increased demand in the US operations caused the Company to re-activate existing rigs, incurring increased costs, changing rig mix and lowering overall margins in this segment;
The Company continued to gear up for international growth with the joint venture. With this growth period, Trinidad incurred additional general and administrative expenses;
Trinidad transitioned their three rigs out of Mexico and moved them to Canada where their specifications are more in demand. The Company expects to recommence operations in Mexico through the joint venture with four rigs by the end of 2014 and early 2015.
As Trinidad transitioned to meet the growing demand in the US, the Company incurred higher repairs and maintenance and rig moving expenses as the Company readied equipment to go back to work. In addition, a number of lower specification rigs were reactivated in the current quarter due to improving customer demand for this type of equipment. Trinidad typically times larger repairs and maintenance costs with increasing market demand.
This was combined with the temporary impact of lower utilization on several high performance rigs that received early termination revenue in previous quarters, causing a decline in profitability in the US and international segment when compared to the same quarter last year. As at June 30, 2014, Trinidad also reviewed its rig fleet based on the marketability of existing assets, resulting in a number of rigs being decommissioned and an impairment expense of $20.6 million recorded in the period.
Trinidad is currently seeing improved industry conditions across all of its operations. The Company anticipates that the factors negatively impacting the results in the second quarter are due to reactivating previously idle rigs, which will not persist into the second half of 2014.
As Trinidad continues to review its rig fleet and ensure all assets remain highly competitive, the retrofit and redeployment of current higher specification rigs will continue into the second half of 2014.
During the second quarter and first six months of 2014, commodity prices increased from the same periods in 2013. Crude oil prices improved for both the US-based WTI benchmark and the Western Canadian Select benchmark prices, driving an ongoing focus towards crude oil and natural gas liquids targets.
Oil prices continued to strengthen and increased in the current quarter from the first quarter of 2014 mostly due to increased geopolitical unrest in the Middle East and Eastern Europe and lowering US storage levels. Natural gas prices were also higher in the current periods compared to the same periods last year, but lowered in the second quarter from the first quarter of 2014. Growing storage levels in North America were the main driver behind lowering natural gas prices in the current quarter.
In the second quarter and first six months of 2014, Canadian industry activity levels averaged 28% and 42%, respectively, up from 18% and 38% in the same periods last year, reflecting the improving industry conditions in Canada.
Trinidad's Canadian utilization rate - drilling days remained stable at 24% quarter over quarter and at 46% year to date in 2014 compared to 48% for the same period last year. Trinidad's activity levels in the current quarter were impacted by the timing of rig re-certifications and customer specific delays and year to date from weaker demand in oil sands related drilling.
In the US, industry activity increased in the second quarter and first six months of 2014, averaging 1,781 and 1,743 active rigs, respectively, up from 1,686 active rigs for the same periods last year.
Trinidad's US and international division averaged approximately 47 active rigs in the second quarter and first six months of 2014 down slightly from approximately 49 active rigs during the same periods in 2013. Trinidad's lower active rig count was driven by three Mexican rigs that were idled after the second quarter of 2013, due to the completion of their contracts.
During the second quarter and year-to-date 2014, the US dollar was stronger against the Canadian dollar than during the same periods last year. Trinidad has a significant portion of its business that operates in US dollars and the change in foreign exchange rates in the quarter had a noticeable and largely positive impact on the Company's results. USD/CDN dollar exchange rates averaged 1.0997 in the current quarter compared to 1.0211 in the same quarter last year.
On a year to date basis, US dollar exchange rates averaged 1.0940 in 2014 compared to 1.0091 for the same period last year. The stronger US dollar positively impacted EBITDA generated by Trinidad's US and international division but also drove increased depreciation and interest expenses in the quarter and year to date.
SECOND QUARTER AND YEAR-TO-DATE 2014 HIGHLIGHTS
Trinidad generated revenue of $168.9 million in the second quarter and $420.5 million year to date in 2014, up 2.1% and 1.9% from the same periods last year. Revenue was positively impacted in 2014 by increased dayrates in the Company's Canadian operations, as well as a positive foreign currency translation on Trinidad's US division.
Revenue was negatively impacted in the current periods by the absence of the Company's coring rigs, which were sold in 2013, lower activity from the Mexican rigs and a weaker contribution from the barge operations. Additionally, Trinidad's manufacturing division had increased revenues due to external new build revenue in 2014.
Overall operating income - net percentage was 28.3% in the second quarter and 35.9% year to date in 2014 compared to 35.6% and 40.2% respectively, in 2013. Profitability lowered in the quarter and year to date largely as a result of higher manufacturing activity in the current year. The manufacturing division typically generates lower margins than Trinidad's drilling operations as the external new builds are constructed for Trinidad's joint venture company and joint venture partner at cost plus a small margin.
In addition in the second quarter of 2014, increased operating costs and lower dayrates, mainly due to rig re-activations of lower specification rigs, led to lower profitability in the US and international division. This was partially offset by a favorable foreign exchange translation on Trinidad's US and international operations in 2014 as the US dollar exchange rate averaged above the Canadian dollar in the current year.
Adjusted EBITDA was $30.6 million in the quarter and $110.1 million year to date in 2014, down 23.3% and 11.8% from the same periods last year. Adjusted EBITDA decreased in the quarter and year to date largely as a result of a decrease in operating income due to the factors discussed above.
Net (loss) earnings were a loss of $24.8 million or $0.18 per share (diluted) in the quarter and earnings of $0.9 million or $0.01 per share (diluted) year to date in 2014, down $25.2 million and $32.1 million, respectively from the same periods last year.
Net (loss) earnings decreased largely as a result of lower operating income, higher share-based payment expenses, a foreign exchange loss and an impairment of property and equipment recorded in the second quarter. This was offset by lower income taxes in the current period and a gain on the sale of property in both the second quarter and year to date 2014.
Adjusted net (loss) earnings decreased by $9.0 million in the quarter compared to the same quarter last year, with adjusted net (loss) earnings per share (diluted) decreasing $0.07 per share. Adjusted net (loss) earnings decreased in the current year due to lower adjusted EBITDA in the current period.
Trinidad's Canadian operations performed well in the second quarter of 2014, recording higher levels of operating revenue and operating income when compared to the same quarter of 2013. Higher dayrates were the main driver behind the improved performance, reflecting strengthening industry conditions in the Canadian market.
For the six months ended June 30, 2014, operating revenue and operating income lowered from the same period in the prior year due to the absence of the preset and coring rigs, which were sold in the third quarter of 2013. These rigs generated $9.3 million in operating revenue in the first half of 2013 compared to nil in the current year.
Operating days were in line with the same quarter last year despite wet weather and flooding towards the end of the second quarter that impacted a number of Trinidad's rigs operating in Manitoba. For the six months ended June 30, 2014, operating days lowered slightly year over year mainly driven by weaker customer demand in the oilsands sector in the first quarter of 2014.
Operating income - net percentage increased in the quarter reflecting improved dayrates in the Canadian drilling division. This was slightly offset by an increase in repairs and maintenance costs in 2014 due to re-certifications performed on rigs in the current year.
However, the increase in costs in the drilling operations was offset by a reduction of costs due to the absence of the preset and coring rigs in 2014. On a year-to-date basis, operating income - net percentage declined slightly year over year mainly due to weaker customer demand in the oil sands sector in the first quarter of 2014.
As part of the Company's ongoing review of its fleet, Trinidad identified five rigs that it deemed were no longer competitive and were not economical to upgrade. Therefore, these rigs were removed from Trinidad's rig fleet at the end of the second quarter. In addition, during the quarter Trinidad relocated three rigs from its Mexican operations to Canada. These rigs are currently being upgraded with top drives and other upgrades and are expected to begin drilling in the second half of 2014.
As of June 30, 2014, Trinidad's active rig fleet decreased by net one rig when compared to June 30, 2013. The change in the rig count reflects the five rigs removed from the fleet in the current quarter, offset by three rigs added from Mexico in the current quarter and one new build delivered to the Canadian operations in the third quarter of 2013. The Mexico rigs were moved to Canada as the size and specifications of these rigs no longer met requirements in the Mexican market.
Second quarter 2014 versus first quarter 2014
The second quarter is typically affected by spring break-up, as weather conditions and road bans restrict the movement of heavy equipment, resulting in lower activity. This seasonality led to a reduction in operating days and lower revenue and operating income in the second quarter compared to the first quarter of 2014.
The impact of lower activity levels was partly offset by an increase of $923 per day in dayrates over the first quarter. Dayrates increased largely as a result of rig mix; in the second quarter, a higher percentage of the active fleet is made up of high specification rigs, resulting in a higher average dayrate.
United States and International Operations
Demand for drilling equipment in the US land drilling market increased in the quarter allowing Trinidad to re-activate a number of existing rigs. While this reflected the improving industry conditions in the US, the Company incurred higher repairs and maintenance costs and moving costs as rigs were mobilized to new locations.
In addition, several lower specification rigs were re-activated during the quarter, lowering the average dayrate when compared to the previous periods. As well, this segment was negatively impacted by Trinidad's three Mexico rigs which remained idle during the first six months of 2014, lowering operating days and operating revenue for this segment on a total basis. Effective June 30, 2014, the three Mexico rigs were moved to the Canadian drilling division.
Operating revenue decreased in the second quarter and year to date in 2014 by $8.4 million and $5.2 million, respectively when compared to the same periods last year. Lower activity levels in the barge operations, three idle rigs in Mexico and lower average dayrates all contributed to lower revenue in the current periods. This impact was partly offset by termination revenue received in the first quarter of 2014 and a favorable foreign currency exchange year over year.
Operating days decreased by 137 days quarter over quarter and 279 days on a year-to-date basis in Trinidad's US and international land drilling division. The decrease in operating days was entirely a result of Trinidad's three Mexican rigs being idle for the first six months of 2014. Effective June 30, 2014, these rigs have been moved to Canada. Excluding the impact of these rigs, the US land drilling division recorded an increase in operating days in each of the three and six months ended June 30, 2014, despite having fewer rigs.
For the three and six months ended June 30, 2014, dayrates decreased by US$1,617 per day and US$745per day, respectively, compared to the same periods of the prior year. Trinidad's US dollar dayrates lowered in 2014, mainly due to a change in the active rig mix as increasing demand for Trinidad's lower specification rigs allowed the company to re-activate this equipment.
Additionally, several high dayrate rigs that received termination revenue in late 2013 and early 2014 were not fully utilized, lowering the overall average dayrate. On a year-to-date basis, this was slightly offset by early termination revenues received for two rigs in the first quarter of 2014.
Operating income and operating income - net percentage declined in each of the three and six months ended June 30, 2014. The decline in revenue, discussed above, was further impacted by increased operating expenses in each period. During 2014, Trinidad re-activated a number of rigs in the US land drilling division, which had significant repairs and maintenance costs for the Company.
In addition, Trinidad incurred costs related to the re-deployment of its Mexican rigs to Canada in the current period. Trinidad expects that operating income - net percentage will improve over the coming quarters as re-activation costs lower and the impact of rig mix is offset by improving industry conditions and increasing dayrates.
At June 30, 2014 Trinidad's US and international rig count totaled 56 rigs, twelve fewer than at the same time last year. The rig count lowered in the second quarter as a result of three Mexican rigs moved to the Company's Canadian drilling operations and two rigs that were no longer considered competitive removed from the marketed fleet at June 30, 2014. In addition, the rig count lowered year over year as three rigs were sold to the joint venture in the first quarter of 2014, and four lower specification rigs were decommissioned at the end of 2013.
Trinidad's barge drilling rigs continued to generate strong dayrates in the current year, showing an increase of US$3,522 per day and US$4,529, respectively, in each of the three and six months ended June 30, 2014. However, a decline in operating days in the current periods caused overall revenue generation and profitability to decline.
Drilling projects that were expected to take place in the first half of 2014 were pushed back to later periods due to customer and permit delays, causing downtime on these rigs in 2014. Utilization began to pick up towards the end of the second quarter, and Trinidad anticipates that activity levels will improve in the coming periods.
Second quarter 2014 versus first quarter 2014
Revenue and operating income decreased by $4.3 million and $9.1 million, respectively, in the second quarter of 2014 when compared to the first quarter of 2014. Strengthening industry conditions in the current quarter led to an increase in operating days; however, this was offset by lower dayrates.
Lower early termination revenues and a change in the active rig mix in the current quarter were the main factors causing lower dayrates quarter over quarter. In addition, higher operating costs as a result of the re-activation and moving of rigs in the current quarter led to higher operating expenses and lower operating income - net percentage.
Joint Venture Operations
During 2013, Trinidad signed a joint venture agreement with Halliburton with a right of first look at all drilling projects outside of Canada and the United States. The joint venture currently has operations in Saudi Arabia, with plans to expand to Mexico by the end of 2014. Additionally, the joint venture continues to look into future growth opportunities in other international markets. The joint venture conducts business under the name Trinidad Drilling International (TDI) through separately incorporated entities.
Trinidad owns 60% of the shares of TDI, and each of Trinidad and Halliburton have equal voting rights with respect to the operations of the company. TDI is accounted for using the equity method of accounting, whereby Trinidad takes 60% of the net income recorded as loss (income) from investment in joint venture.
During the six months ended June 30, 2014, TDI took ownership of three upgraded rigs purchased from Trinidad's US land drilling division and one new build rig purchased from Trinidad's manufacturing division. Two of these rigs were drilling by the end of the period, with the remaining two rigs expected to begin working in the second half of 2014.
For the three months ended June 30, 2014, TDI recorded operating income and operating income - net percentage of $4.9 million and 48.2%, respectively. Additionally, for the first six months of 2014, TDI recorded operating income and operating income - net percentage of $6.1 million and 45.6%, respectively. In the second quarter of 2014, TDI began drilling operations with two rigs recording operating days in the quarter and also collected standby revenue.
Rig Purchase Commitments
During 2013, TDI agreed to purchase four rigs from Trinidad for operations in Saudi Arabia, three upgraded rigs from Trinidad's US drilling division and one new build rig constructed by Trinidad's manufacturing division. As of June 30, 2014, TDI has taken ownership of all three upgraded rigs and the new build rig.
Additionally, early in 2014, TDI agreed to purchase four rigs from Trinidad's manufacturing division for operations in Mexico. Each of these rigs will be high performance, 3,600 horsepower, AC, walking rigs, operating under three-year, take-or-pay contracts with an optional one year extension. These rigs are expected to be delivered towards the end of 2014 and early 2015.
Effective January 1, 2014, Trinidad reviewed all existing operating segments in order to better present the Company's operations based on geographic location, services provided and any material changes to operations.
In the prior year, Trinidad's manufacturing operations mainly performed work internally; therefore, the prior year operating income includes a loss based on costs incurred by the manufacturing division mainly related to raw materials consumed during construction of rigs for internal use. Towards the end of 2013 and early 2014, Trinidad's manufacturing division signed contracts to build rigs for external parties, including the Company's joint venture partner and the joint venture company.
As the manufacturing operations begins to record operating revenues and costs, management believes that presenting this division as a separate operating segment from the Company's drilling operations is more useful to users of the financial statements, as it will provide a more accurate representation of the margins recorded on Trinidad's drilling operations. Prior period segmented information has been reclassified to conform to the current period's presentation.
The purpose of the manufacturing operations is to support rig builds, rig maintenance and re-certifications for all of Trinidad's divisions, including all associates and joint ventures. Therefore, management does not commit to building a rig with the intention to earn significant profits from this business.
All contracts are based on a cost plus formula which is calculated in order for Trinidad to break even on rig builds when all costs, including general and administrative expenses, are factored in. Contracts are negotiated depending on the Company's varying involvement, which can range from full scale design and manufacturing to project management with a large degree of outsourcing.
Towards the end of 2013 and into 2014, Trinidad signed five new build contracts; one rig for the joint venture to operate in Saudi Arabia and four rigs for the joint venture to operate in Mexico. Additionally, Trinidad has agreed to build a training rig for its joint venture partner. For the period ended June 30, 2014, Trinidad recognized revenues and expenses related to the Saudi rig build and the training rig, compared to no external new build revenues or expenses recognized in 2013.
Additionally, as of June 30, 2014, Trinidad is still early in the construction phase of the four Mexico rigs. Long-lead items have been ordered and some inventory has arrived, but assembly has not occurred as yet. Therefore, there is no related revenue or expenses included in Trinidad's operating income related to the construction of these rigs.
During the second quarter of 2014, Trinidad's manufacturing operations delivered the new Saudi rig to the joint venture. The training rig is expected to be delivered towards the end of 2014 and delivery of the four Mexico rigs are expected towards the end of 2014 and early 2015.
Trinidad's total long-term debt balance increased by $2.5 million during the current year when compared to December 31, 2013. This slight increase was due to the increase in the Senior Notes at June 30, 2014, and is entirely a result of the increase in the US to Canadian dollar exchange rate in 2014 versus the prior year as these notes are held in US funds.
The Senior Notes are translated at each period end, as such their value will fluctuate with variations in exchange rates. The Senior Notes are due January 2019 and interest is payable semi-annually in arrears on January 15 and July 15.
As at June 30, 2014 and December 31, 2013, Trinidad's revolving debt facilities were completely paid off, leaving $200.0 million and US$100.0 million unutilized in these facilities, respectively. The Company continues to consider future capital commitments, and as such, the unutilized facilities are expected to be used in the future course of business.
The Canadian and US revolving facilities require quarterly interest payments that are based on Bankers Acceptance and LIBOR rates and incorporate a tiered interest rate, which varies depending on the results of the Consolidated Total Debt to EBITDA ratio. The facility matures on December 16, 2017, and is subject to annual extensions of an additional year on each anniversary.
During the six months ended June 30, 2014, a total of $102.8 million was spent on capital expenditures, compared to $32.8 million at June 30, 2013. These capital expenditures were substantially related to work on upgrading existing equipment including moving systems, top drives and mud systems, to ensure the Company's rigs remain competitive in the current market.
Additionally, these costs would include work performed to upgrade the three US land drilling rigs that were sold to Trinidad's joint venture for operations in Saudi Arabia. Lastly, costs were incurred as progress was made on the Company's internal rig build to be delivered to the Canadian operations.
In 2014, Trinidad expects to spend a total of approximately $315.0 million on capital projects. This total includes Trinidad's internal capital projects, Trinidad's portion of the joint venture capital projects, and takes into account proceeds received for existing rigs sold into the joint venture. Trinidad's capital budget is further broken down as follows:
Completion of one new rig to be delivered to Trinidad's Canadian operations for LNG-related drilling;
Completion of one new rig and the upgrading of three existing rigs to be delivered to Saudi Arabia for the joint venture arrangement;
Construction of four new rigs to be delivered to Mexico for the joint venture arrangement in late 2014 or early 2015;
Upgrades to improve the efficiency and marketability of more than 30 existing rigs and
Maintenance and infrastructure capital.
Excluding proceeds received from the sale of rigs into the joint venture, in the second quarter and year-to-date 2014, Trinidad spent $79.9 million and $118.0 million, respectively, on internal capital projects and its portion of the joint venture projects. Costs related to the joint venture rig build projects are accounted for as operating expenses in Trinidad's manufacturing operations.
As of June 30, 2014, the three upgraded rigs and the new build rig were delivered to the joint venture for operations in Saudi Arabia. Two of the upgraded rigs began operations in the current quarter, with the remaining upgraded rig and new build rig expected to begin in the second half of 2014.
Conditions in the North American drilling industry have been steadily improving throughout 2014. Stable commodity prices have led to strong demand with activity continuing to be largely focused on oil or liquids-rich targets. Increasing demand for high performance equipment, such as Trinidad's, is driving higher activity levels and improved dayrates for this style of rig.
Industry activity levels have increased over the previous year in both the Canadian and US markets and Trinidad anticipates that these conditions will continue through the remainder of 2014 and into 2015. The number of rigs under long-term, take-or-pay contracts has increased to represent approximately 45.0% of the Company's fleet with an average term remaining of approximately 1.6 years.
Operations in the Company's international joint venture are progressing as expected, with all eight rigs expected to be operational in late 2014 or early 2015. Halliburton continues to present opportunities to the joint venture as they arise and Trinidad anticipates growing its international presence in the coming quarters.
Trinidad's capital program for 2014 remains at $315.0 million, including the Company's portion of capital for the joint venture. Increasing demand for high performance equipment, particularly in the US and international markets, is driving a growing number of requests for additional equipment from Trinidad's customers. The Company is reviewing these growth opportunities, carefully evaluating contract terms, capital returns, cash flow requirements and areas of strategic growth before selecting those, if any, to pursue.
The Company expects that re-activation costs are largely complete in the US division. Although Trinidad will continue to review its active rig fleet and upgrade rigs to remain competitive, strong industry conditions across its operations should continue throughout 2014, and Trinidad expects to perform well for the remainder of the year.
TRINIDAD DRILLING LTD.
Trinidad is a corporation focused on sustainable growth that trades on the Toronto Stock Exchange under the symbol TDG. Trinidad's divisions operate in the drilling and barge-drilling sectors of the North American oil and natural gas industry with operations in Canada and the United States.
In addition, through a joint venture agreement signed in the previous year, Trinidad began operating drilling rigs in Saudi Arabia, expects to begin operations in Mexico by the end of 2014, and is currently looking into operations in other international markets. Trinidad is focused on providing modern, reliable, expertly designed equipment operated by well-trained and experienced personnel. Trinidad's drilling fleet is one of the most adaptable, technologically advanced and competitive in the industry.
NON-GAAP MEASURES DEFINITIONS
This document contains references to certain financial measures and associated per share data that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.
These financial measures are computed on a consistent basis for each reporting period and include EBITDA, EBITDA from investment in joint venture, Adjusted EBITDA, Adjusted net (loss) earnings, working capital, Senior Debt to Bank EBITDA, Total Debt to Bank EBITDA, Bank EBITDA to Cash Interest Expense, drilling days, operating days, utilization rate - drilling day, utilization rate - operating day, and rate per operating day or dayrate. These non-GAAP measures are identified and defined as follows:
'EBITDA' is a measure of the Company's operating profitability. EBITDA provides an indication of the results generated by the Company's principal business activities prior to how these activities are financed, assets are depreciated and amortized or how the results are taxed in various jurisdictions.
'EBITDA from investment in joint venture' provides an indication of the results generated by the Company's joint venture operations prior to how these activities are financed, assets are depreciated and amortized or how the results are taxed in various jurisdictions.
'Adjusted EBITDA' is used by management and investors to analyze EBITDA (as defined above) prior to the effect of foreign exchange, share-based payment expense, impairment expense and the sale of assets. Adjusted EBITDA also takes into account the Company's portion of the principal activities of the joint venture arrangement by removing the loss (gain) from investment in joint venture and including Adjusted EBITDA from investment in joint venture.
Adjusted EBITDA is not intended to represent net (loss) earnings as calculated in accordance with IFRS. Adjusted EBITDA provides an indication of the results generated by the Company's principal business activities prior to how these activities are financed, assets are depreciated, amortized and impaired, the impact of foreign exchange, how the results are taxed in various jurisdictions and effects of share-based payment expense.
ADDITIONAL GAAP MEASURES DEFINITIONS
The Company uses certain additional GAAP financial measures within the financial statements and document that are not defined terms under IFRS to assess performance. Management believes that these measures provide useful supplemental information to investors. These financial measures are computed on a consistent basis for each reporting period and include Funds provided by operations, Operating income, Operating income percentage and Operating income - net percentage. These additional GAAP measures are identified and defined as follows:
'Funds provided by operations' is used by management and investors to analyze the funds generated by Trinidad's principal business activities prior to consideration of working capital, which is primarily made up of highly liquid balances. This balance is reported in the Consolidated Statements of Cash Flows included in the cash provided by operating activities section.
'Operating income' is used by management and investors to analyze overall and segmented operating performance. Operating income is not intended to represent an alternative to net (loss) earnings or other measures of financial performance calculated in accordance with IFRS. Operating income is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information contained in the notes to the consolidated financial statements. Operating income is defined as revenue less operating expenses.
'Operating income percentage' is used by management and investors to analyze overall and segmented operating performance, including third party recovery and third party costs, as well as inter-segment revenue and inter-segment operating costs. Operating income percentage is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information in the notes to the consolidated financial statements. Operating income percentage is defined as operating income divided by revenue.
'Operating income - net percentage' is used by management and investors to analyze overall and segmented operating performance excluding third party recovery and third party costs, as well as inter-segment revenue and inter-segment operating costs, as these revenues and expenses do not have an effect on consolidated net (loss) earnings.
Operating income - net percentage is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information in the notes to the consolidated financial statements. Operating income - net percentage is defined as operating income less third party G&A expenses divided by revenue net of operating and G&A third party costs.
This document contains certain forward-looking statements relating to Trinidad's plans, strategies, objectives, expectations and intentions. The use of any of the words 'expect', 'anticipate', 'continue', 'estimate', 'objective', 'ongoing', 'may', 'will', 'project', 'should', 'believe', 'plans', 'intends', 'confident', 'might' and similar expressions are intended to identify forward-looking information or statements. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this document.
The forward-looking information and statements included in this document are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements.
Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements.
In particular, but without limiting the foregoing, this document may contain forward-looking information and statements pertaining to the completion of announced rig construction programs on a timely basis and economical terms; the assumption that Trinidad's customers will honour their take-or-pay contracts; fluctuations in the demand for Trinidad's services; the ability for Trinidad to attract and retain qualified personnel, in particular field staff to crew the Company's rigs; the existence of competitors, technological changes and developments in the oilfield services industry; the existence of operating risks inherent in the oilfield services industry; assumptions respecting capital expenditure programs and other expenditures by oil and gas exploration and production companies; assumptions regarding commodity prices, in particular oil and natural gas; assumptions respecting supply and demand for commodities, in particular oil and natural gas; assumptions regarding foreign currency exchange rates and interest rates; the existence of regulatory and legislative uncertainties; the possibility of changes in tax laws and general economic conditions including the capital and credit markets; assumptions made about future performance and operations of the joint venture arrangement.
Trinidad cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this document speak only as of the date of this document and Trinidad assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
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