Trinidad Drilling Ltd. was a corporation headquartered in Calgary, Alberta, Canada that operated in the drilling and well servicing sectors of the North American oil and gas industry. Trinidad was acquired by Ensign Energy Services between late 2018 to early 2019, and was amalgamated into Ensign in 2019.[1]
 | |
| Company type | Public |
|---|---|
| TSX: TDG | |
| Industry | Oil and gas |
| Founded | Calgary, Alberta (1996) |
| Fate | Acquired by Ensign Energy Services |
| Headquarters | Calgary, Alberta, Canada |
Key people | Lyle C. Whitmarsh, CEO; Brent J. Conway, President |
| Products | Drilling & well services |
| Revenue |  $859.327 million CAN (2012) |
Number of employees | 3,000 |
| Website | www |
History
editThe company converted to an income trust in 2002 and did business under the name Trinidad Energy Services Income Trust. It later reverted to a corporation under the name Trinidad Drilling.[citation needed]
In 2014 Trinidad entered a joint venture with Halliburton/Baker Hughes (40%) and plans to drill in Saudi Arabia that led to surmising of a Halliburton takeover plan.[2]
In August 2017 Trinidad purchased RigMinder Inc. in a $40 million cash and stock acquisition. This has allowed the integration electronic data between the rig and the directional drilling tools as well as cutting costs.[3]
In January 2018 Trinidad announced it would be moving eight rigs, two from Canada, three from Saudi Arabia, and three from other areas of the US, to the Permian Basin area in West Texas and New Mexico.[4] The plans had to be altered because the company decided to sell the three rigs in Saudi Arabia instead of moving them. The price of around $114 million will see a net of $69 million with the rest going to partner Halliburton. According to the new report CEO Brent Conway stated "selling is a better option because the funds can be used for its capital program or to repay debt."[5]
Acquisition
editThis section may contain an excessive amount of intricate detail that may interest only a particular audience. (March 2020) |
A strategic review process that began in late 2017, a procedure to court potential buyers looking for a "white knight" to reportedly maximize value for shareholders, was not fruitful. In August 2018 the company was tendered a formal unsolicited offer, that is considered a hostile takeover bid, by Ensign Energy Services. By October 2018 Precision Drilling made an offer, valued at over $1 billion, potentially pitting the two largest Canadian drilling companies against each other.
A turn of events started with the director of Trinidad Drilling purchasing shares of the company in August 2018 that happened during a strategic review process looking for buyers. When no offers were tendered Ensign Energy Services stepped in with an unsolicited offer or hostile takeover attempt, valued at C$947 million (US$720.26 million) including $477 million in debt at $1.68 a share.[6] This was a 20% premium to the volume weighted average price of the common shares of Trinidad on the TSX for the trading days between August 1, 2018 through August 10, 2018 and an 11% premium to the closing price on the last trading day prior to the announcement.[7][8] By the end of August 2018 Ensign owned 9.8 percent of Trinidad’s shares. Although not part of the strategic review process Ensign tendered an informal offer that was rejected. The company then made the same unsolicited offer formal.[9] The Board of Directors has recommended shareholders reject the Ensign offer because it undervalues the company with a low balling bid.[10]
The financial market has mixed reviews on the future company share value with National Bank Financial lowering the price objective for the stock in September 2018 from an outperform rating to a sector perform rating with a target price of $2.20 a share. Analysts at Canaccord Genuity lowered the price objective from $2.20 to $2.10 a share and BMO Capital Markets lowered the price objective from $3.00 to $2.00. Raymond James had raised the price objective from C$2.75 to C$3.00. Three investment analysts have issued a "hold" rating on the stock, five have it listed as "buy", with an average target price of C$2.41.[11]
In October 2018 Precision Drilling entered into an agreeable negotiation with Trinidad, that includes a stock swap of 0.445 Precision stocks for each Trinidad stock. Including debt the deal is worth $1.03 billion dollars. Also included is a $20 million break fee that Precision will have to agree to pay if the deal does not materialize. A Raymond James analyst, Andrew Bradford, noted that Ensign could sweeten the deal, also agreeing to pay the break fee, or walk away. The counter offer may lead a bidding war that would be beneficial to Trinidad stock holders.[12]
See also
editReferences
edit- ^ Ensign Energy Services Inc. (2019-03-28). "Ensign Provides an Update on New Drilling Rig Contracts (Permian, Canada, and International) and an Update on the Integration of Trinidad". Cision Canada. Newswire.ca. Retrieved 2020-03-11.
- ^ "Trinidad Drilling Ltd. Potential Takeover And Halliburton/Baker Hughes' Role". Seeking Alpha. 26 November 2014.
- ^ Mason, Richard (Chief Technical Director) (6 October 2017). "Digitalization Comes To Directional Drilling". Hart Energy.
- ^ McEwen, Mella (3 February 2018). "Two Canadian drillers relocating rigs to Permian Basin to meet demand". MRT: Midland Reporter-Telegram (acquired by Hearst in 1979).
- ^ "Trinidad Drilling sells rigs to Saudi Arabia instead of moving them to U.S." The Canadian Press. 12 April 2018.
- ^ "Ensign Launches C$947 Million Takeover Bid For Trinidad Drilling". Hart Energy. 13 August 2018.
- ^ "Trinidad Drilling Ltd. (TDG.TO): Historical data on shares".
- ^ Varcoe, Chris (14 September 2018). "Trinidad Drilling seeks white knight as it fends off hostile bid by Ensign". Calgary Herald.
- ^ Jaremko, Deborah (30 August 2018). "Ensign makes formal offer to acquire Trinidad Drilling". JWN Energy.
- ^ "REJECT Ensign's Hostile Bid". Trinidad shareholders announcement. 14 September 2018. (Primary source on rejection call)
- ^ Cottrell, Gemma (27 September 2018). "Trinidad Drilling (TDG) Downgraded by National Bank Financial to "Sector Perform"". Fairfield Current.
- ^ Morgan, Geoffrey (5 October 2018). "Precision Drilling emerges as white knight for Trinidad, but Ensign may still sweeten bid". Financial Post. Retrieved 2018-10-10.