IT'S ABOUT PERFORMANCE Corporate Presentation October 2015 IT'S ABOUT PERFORMANCE 1
Forward Looking Information Certain information in this document is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of Trinidad Drilling Ltd. to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory environment, competitive factors in the natural gas transportation and natural gas liquids extraction industries and the prevailing economic conditions in North America. For additional information on these and other factors, see the reports filed by Trinidad Drilling Ltd. with Canadian securities regulators. Trinidad Drilling Ltd. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. IT'S ABOUT PERFORMANCE 2
Why Invest In Trinidad Trinidad has: High quality fleet Diversified operations Solid plan for the downturn; well positioned for the rebound International expansion opportunities Improved liquidity IT'S ABOUT PERFORMANCE 3
Operations Overview Canada 82 rigs US 70 rigs 2 barges Mexico* 6 rigs Saudi* 4 rigs UAE 1 rig IT'S ABOUT PERFORMANCE Rig Manufacturing Innovation & Design * Rigs operating under the JV included at 100 percent IT'S ABOUT PERFORMANCE 4
North American Industry Update Canada activity remains weak compared to prior years US activity stalled, new opportunities on hold Competition strong, with pressure on dayrates Early termination of contracts slowed IT'S ABOUT PERFORMANCE 5
week 1 week 4 week 7 week 10 week 13 week 16 week 19 week 22 week 25 week 28 week 31 week 34 week 37 week 40 week 43 week 46 week 49 week 52 week 01 week 04 week 07 week 10 week 13 week 16 week 19 week 22 week 25 week 28 week 31 week 34 week 37 week 40 week 43 week 46 week 49 week 52 Industry Active Rig Counts North American activity below previous lows Volatility impacting E&Ps budgeting ability Cost structure being re-set across the industry 1000 Canadian Industry Active Rig Count 5 year range 2009 2014 2015 2500 US Industry Active Rig Count 5 year range 2009 2014 2015 800 2000 600 400 1500 200 1000 0 500 Source: Bloomberg Baker Hughes Oil and Gas Rotary Rig Count IT'S ABOUT PERFORMANCE 6
Trinidad Update
CanElson Acquisition Update Effective date August 11, 2015 Overwhelming approval from shareholders >95% approval from >60% of all outstanding shareholders Issued 88.7 million shares and $50 million in cash Total shares outstanding now 222.1 million Integration underway, synergy identification and process alignment in progress IT'S ABOUT PERFORMANCE 8
Benefits of CanElson Combination Greater scale to capitalize on opportunities Larger, more diverse fleet with industry-leading activity Savings through increased scale and operating efficiencies Expanded management team and board of directors provide improved leadership and guidance Lower leverage metrics Increased market liquidity, improved cost of capital and future access to capital IT'S ABOUT PERFORMANCE 9
Trinidad s Canadian Operations Key Operating Areas Liard Montney Duvernay Cardium Oil sands Lloyd Heavy Oil AB Bakken Frobisher Active in key plays Consistent industry-leading activity Customers waiting to commit to rigs Activity low by historical levels IT'S ABOUT PERFORMANCE 10
Different Markets, Different Needs Tele-double rigs the most active rigs in Canada Mechanical rigs with high hookload and large pumps AC rigs make up approx. 10-15% (1) of Canadian market Trinidad s Canadian fleet has the right specifications Average depth ~6,000m (20,000 ft) (2) Average hookload ~185,000daN (416,000 lbs) Average horsepower ~827 HP (1) Source: Estimates from CAODC data (2) Assumes horizontal depth capacity Trinidad s rigs remain more active IT'S ABOUT PERFORMANCE 11
Trinidad s United States Operations Key Operating Areas Bakken Niobrara US operations less seasonal Dayrates and activity remain under pressure Customers waiting to commit to rigs Mississippi Lime Permian Barnett Haynesville Eagle Ford Eaglebine Tuscaloosa IT'S ABOUT PERFORMANCE 12
US More Technology Focused US customers focused on efficiency gains from technology AC rigs, preferably with moving systems and large pumps the rig of choice Trinidad known in the US for its high performance, AC powered rigs Approximately 50% of Trinidad s US fleet is AC rigs IT'S ABOUT PERFORMANCE 13
Trinidad s International Operations Key Operating Areas Mexico Saudi UAE Joint venture with Halliburton (1) (60/40 Split) Combines customer relationships and operational excellence Growing international joint venture contribution Less affected by volatile commodity prices (1) Halliburton Project Management with 40% interest IT'S ABOUT PERFORMANCE 14
HAL Joint Venture Saudi Four rigs currently operating in Ghawar field 2015 is first full year of operations Costs lowering as operations grow Drilling efficiencies have improved 40% increase in well delivery performance from first year of Saudi operations IT'S ABOUT PERFORMANCE 15
HAL Joint Venture Mexico Construction of new builds complete Three rigs working; one receiving standby New builds performance exceeding expectations In Mexico, we completed drilling the first well using rigs from our joint venture with Trinidad Drilling, setting a new drilling record for South Mexico Mesozoic basin. Jeffrey Allen Miller, Halliburton President, Director & Chief Health, Safety and Environment Officer Excerpt from Q2 2015 conference call IT'S ABOUT PERFORMANCE 16
Joint Venture International Growth Strong performance leads to opportunities: Replace existing rigs Supply high specification rigs for new projects Can be new builds or existing Trinidad rigs Potential opportunities exist for CanElson rigs IT'S ABOUT PERFORMANCE 17
Short Term Plan for the Downturn
Consistent Industry Outperformance Trinidad s rigs are more active 70% 60% Canadian Utilization Rates Trinidad s Canadian Utilization TDG US 65 60 55 US Average Active Rig Count Trinidad s US Average Active Rig Count US 2,800 2,400 50% 50 45 2,000 40% 40 35 1,600 30% 20% 30 25 20 15 Industry Average Active Rig Count 1,200 800 10% Industry Average 10 5 400 0% 0 0 Source Canadian Association of Oil Well Drilling Contractors Source Bloomberg US Baker Hughes Rig Counts, Company Reports excludes rigs on Standby IT'S ABOUT PERFORMANCE 19
Deep and Modern Fleet In-demand rigs generate higher dayrates and margins In Demand Specifications Rig Fleet Horizontal Depth 23% 68% 10% 0-11,999 ft 7% 22% 12,000-17,999 ft 18,000+ ft 70% Rig Fleet Age Tier 1 - High Hookload, Top Drive, Large Mud Pumps 23% < 5 years Tier 2 - Must have two of the three (High Hookload, Top Drive, Large Mud Pumps) Tier 3 - Mechanical Rigs, Lower HP, Lower Hookload 51% 26% 5-10 years > 10 years Land drilling rigs only IT'S ABOUT PERFORMANCE 20
Reduced Cost Structure Highly variable cost structure Field labour fluctuates with activity Lower overhead costs Reduction in salaried headcount Wage rollbacks Cost reduction strategies with suppliers Reduced capital budget IT'S ABOUT PERFORMANCE 21
Conservative Capital Program 2015 Capital Budget $185 million (1)(2) Complete US new builds Complete Mexico JV rigs Select upgrades / maintenance capital / capital inventory 2016 Capital Budget under review (1) Joint Venture includes Trinidad s 60% portion of TDI JV capital (2) Includes capital budget of $10 mm from CanElson business combination 2015 Capital Program ($mm) $60 $40 New Builds Capital Inventory Joint Venture(1) $34 $12 $39 Upgrades Maintenance IT'S ABOUT PERFORMANCE 22
Customer Backed Growth We only build rigs under long-term contracts Approximately 35% of fleet on long-term contract Approximately 1.5 years average term remaining IT'S ABOUT PERFORMANCE 23
Improved Liquidity Lower leverage following CanElson acquisition Funds available on credit lines Pro Forma Q2 2015 Debt/EBITDA at 1.85 (1) times Outstanding debt largely non-covenant debt Can use CanElson s trailing 12 months in covenant calculation Covenant relief for Q4 2015 and Q1 2016 of 0.5 times (to 4.5 times as part of the acquisition) (1) Includes accumulated JV EBITDA and pro-forma for CanElson at Q2 2015 IT'S ABOUT PERFORMANCE 24
Long Term Strategy
Future Growth Opportunities When market conditions improve Trinidad has: Expertise, customer base and track record to capture North American market share A good vehicle for international growth through its joint venture Independent international opportunities Potential opportunities exist for CanElson rigs IT'S ABOUT PERFORMANCE 26
Investing in People and Safety Skilled crews drive improved performance and customer demand Experienced, well-trained people our biggest asset Competency training program implemented Industry leading safety processes Retain experienced people through the downturn IT'S ABOUT PERFORMANCE 27
Long Term Debt Plan Long term leverage target of 1.5 times debt/ebitda Review ways to lower leverage Grow EBITDA base Reduce future capital budgets, pursue only high return projects Sell additional assets to the JV (40% of value repaid) Review all costs and cash outflows Strategic capital allocation IT'S ABOUT PERFORMANCE 28
Why Invest In Trinidad Trinidad has: High quality fleet Diversified operations Solid plan for the downturn; well positioned for the rebound International expansion opportunities Improved liquidity IT'S ABOUT PERFORMANCE 29
APPENDIX IT'S ABOUT PERFORMANCE IT'S ABOUT PERFORMANCE 30
Second Quarter Financial Highlights (3) Three months ended Jun 30, Six months ended June 30 ($ thousands except share and per share data) 2015 2014 % Change 2015 2014 % Change Revenue 95,213 168,945 (43.6) 289,609 420,450 (31.1) Revenue, net of third party costs 89,992 159,644 (43.6) 276,071 390,662 (29.3) Operating income (1) 41,896 45,605 (8.1) 114,178 140,797 (18.9) Operating income percentage (1) 44.0% 27.0% 63.0 39.4% 33.5% 17.6 Operating income - net percentage (1) 46.3% 28.3% 63.6 41.1% 35.9% 14.5 EBITDA (1) 27,686 5,445 408.5 79,210 86,700 (8.6) Per share (diluted) (2) 0.21 0.04 425.0 0.59 0.62 (4.8) Adjusted EBITDA (1) 34,679 30,644 13.2 94,708 110,086 (14.0) Per share (diluted) (2) 0.26 0.22 18.2 0.71 0.79 (10.1) Cash provided by operations 113,621 71,086 59.8 114,549 90,519 26.5 Per share (basic / diluted) (2) 0.85 0.51 66.7 0.86 0.65 32.3 Funds provided by operations (1) 25,132 30,285 (17.0) 61,224 91,142 (32.8) Per share (basic / diluted) (2) 0.19 0.22 (13.6) 0.46 0.66 (30.3) Net (loss) earnings (1,467) (24,815) 94.1 10,663 947 1,026.0 Per share (basic / diluted) (2) (0.01) (0.18) 94.4 0.08 0.01 700.0 Adjusted net (loss) earnings (1) (297) (5,557) 94.7 17,728 22,189 (20.1) Per share (basic / diluted) (2) - (0.04) - 0.13 0.16 (18.8) Capital expenditures 41,794 71,587 (41.6) 91,928 102,793 (10.6) Dividends declared 6,671 6,910 (3.5) 13,343 13,818 (3.4) Shares outstanding - diluted (weighted average) (2) 133,425,344 138,873,120 (3.9) 133,559,340 138,848,922 (3.8) As at June 30, December 31, ($ thousands except percentage data) 2015 2014 % Change Total assets 2,024,223 1,941,621 4.3 Total long-term liabilities 738,737 628,047 17.6 (1) Readers are cautioned that Operating income, Operating income percentage, Operating income - net percentage, EBITDA, Adjusted EBITDA, Funds provided by operations, Adjusted net (loss) earnings and the related per share information do not have standardized meanings prescribed by IFRS see Non-GAAP Measures and Additional GAAP Measures. (2) Basic shares include the weighted average number of shares outstanding over the period. Diluted shares include the weighted average number of shares outstanding over the period and the dilutive impact, if any, of the number of shares issuable pursuant to the Incentive Option Plan. (3) Excludes CanElson IT'S ABOUT PERFORMANCE 31
Debt Overview Debt/EBITDA at 1.85 (1) times at Q2 2015 Debt covenants Debt/EBITDA max of 4.0 times (relief to 4.5 times, after acquisition) (2) Senior Debt/EBITDA max of 3.0 times EBITDA/Cash Interest Expense min of 2.75 times Credit Facility Available Outstanding Q2 2015 Expiry Revolver C$200 m US$200 m C$69.9 m US$0 m Dec 2018 US$ Senior Notes (7. 785%) US$450 m US$450 m Jan 2019 Total Long-term Debt Cash on Hand C$623 m C$116 m Table excludes CanElson (1) Includes accumulated JV EBITDA and pro-forma for CanElson at Q2 2015 (2) Relief for two quarters following the closing of the acquisition IT'S ABOUT PERFORMANCE 32
Historical Dayrates (1) Dayrates ($CDN) $35,000 Canada Rate Per Operating Day vs Operating Margin 50% Dayrates ($US) $30,000 US Rate Per Operating Day vs Operating Margin 60% $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 40% 30% 20% 10% $25,000 $20,000 $15,000 $10,000 $5,000 50% 40% 30% 20% 10% $0 0% $0 0% Rate per operating day Operating margin Rate per operating day Operating margin Dayrates ($US) $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 JV Rate Per Operating Day vs Operating Margin 50% 40% 30% 20% 10% 0% (1) Excludes CanElson Rate per operating day Operating margin IT'S ABOUT PERFORMANCE 33
Combined Fleet Expands Diversity Liard Montney Duvernay Deep Basin Cardium AB Bakken Oil sands Lloyd Heavy Oil Bakken CANADA Niobrara MIDDLE EAST TDG Operating Area Permian Mississippi Lime Barnett Woodford Haynesville Tuscaloosa Eagle Bine Eagle Ford MEXICO US Canada US Int'l Total Trinidad Rigs 54 50 8 112 CanElson Rigs 28 21 2 51 Total 82 71 10 163 JV and partnership rigs included at 100%, excludes barge and service rigs Mutual Operating Area IT'S ABOUT PERFORMANCE 34
A Continued Focus on Safety TRIF 4.00 Total Recordable Incident Rates 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 TRIF Total Recordable Injury Frequency, 12 month corporate rolling average Aug 2015 Pro forma IT'S ABOUT PERFORMANCE 35
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 Adjusted EBITDA, Total Debt to EBITDA, drilling days, operating days, utilization rate - drilling day, utilization rate - operating day, and rate per operating day. These non-gaap measures are identified and defined as follows: Adjusted EBITDA is used by management and investors to analyze EBITDA (as defined above) prior to the effect of foreign exchange, sharebased payment expense, impairment expenses 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 EBITDA from investment in joint venture. Adjusted EBITDA is not intended to represent net 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 expenses. Total Debt to Bank EBITDA is defined as the consolidated balance of long-term debt, which includes the Senior Debt, Senior Notes Payable and dividends payable at quarter end, to consolidated Bank EBITDA for the TTM. Bank EBITDA used in this financial ratio is calculated as EBITDA plus impairment expense, loss (gain) on sale of property and equipment, loss (gain) from investment in joint venture, share-based payment expense and unrealized foreign exchange. Drilling days is defined as rig days between spud to rig release. Operating days is defined as moving days (move in, rig up and tear out) plus drilling days (spud to rig release). Utilization rate - drilling day is defined as drilling days divided by total available rig days. Utilization rate - operating day is defined as operating days (drilling days plus moving days) divided by total available rig days. Rate per operating day or Dayrate is defined as operating revenue (net of third party costs) divided by operating days (drilling days plus moving days). Payout level is defined as annual dividends declared divided by annual funds provided by operations. Cash-on-cash yield is defined as annual dividends declared per share divided by the current share price. Free Cash Flow is defined as annual funds provided by operations minus the sum of annual dividends declared and annual capital expenditures. IT'S ABOUT PERFORMANCE 36
Add l GAAP Measures Definitions The Company uses certain additional GAAP financial measures within the financial statements and this document that are not defined terms under IFRS to assess performance. Management believes that these measures provide useful supplemental information to investors, and provide the reader a more accurate reflection of our industry. These financial measures are computed on a consistent basis for each reporting period and include Funds provided by operations, Operating income and Operating income - net percentage or Operating margin. 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 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 - net percentage or operating margin 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 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. IT'S ABOUT PERFORMANCE 37
1000, 585 8 Avenue S.W. Calgary, AB, Canada T2P 1G1 T 403.265.6525 IT'S ABOUT PERFORMANCE Email: investors@trinidaddrilling.com www.trinidaddrilling.com IT'S ABOUT PERFORMANCE 38