Trinidad Drilling reports fourth quarter and full year results
Trinidad Drilling Ltd. (TSX:TDG) reported fourth quarter and full year 2015 results and suspended the Company's dividend today.
Trinidad's strong contract position and cost control measures in 2015 partly offset lower activity and increased competition, allowing the Company to maintain solid operating income - net percentage in the fourth quarter and full year. However, the impact of weak commodity prices and reduced customer demand in the current periods, led to lower adjusted EBITDA(1) and net earnings compared to the same periods in 2014. A growing contribution from Trinidad's joint venture operations and the addition of CanElson Drilling Inc.'s (CanElson) rigs in the third quarter also positively impacted the Company in the current periods.
In the fourth quarter, Trinidad decommissioned 15 lower specification rigs, high grading its fleet to remain competitive in future periods. The Company also recorded an impairment charge in the quarter as a result of lower forecast cash flow generation driven by weak commodity price expectations and limited customer demand.
Trinidad's board of directors agreed to suspend the dividend, effective immediately. Throughout the past year, in order to manage through the challenging market conditions, Trinidad has reduced headcount, operating and administrative costs and capital expenditures. However, due to limited visibility regarding the expected duration of the current downturn, Trinidad felt it was prudent to suspend its dividend and reduce future cash outflows.
This change in dividend policy follows an earlier reduction in the fourth quarter of 2015. The annualized cash savings from today's dividend suspension is approximately $9 million.
'Our fourth quarter results continue to demonstrate the strength of our contracts and the flexibility of our cost structure. Despite very challenging conditions our activity levels have stood up well compared to the industry as a whole,' said Lyle Whitmarsh, Trinidad's Chief Executive Officer. 'The duration and extent of the current downturn has been more severe than most industry participants expected at its outset; however, we have taken control of the aspects of our business that we can. By resizing our business to meet current conditions, we have been able to reduce our costs and maintain reasonable operating margins, we have also taken steps to manage our financial flexibility with a very small capital budget planned for 2016, a relaxation of our debt covenants and the suspension of our dividend. We will continue to be financially prudent, while also maintaining a longer-term outlook and planning for Trinidad's future success when better conditions return.'
Trinidad Drilling Ltd.
Trinidad and Tobago
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