Calgary-based Trinidad Drilling plans to boost its market share in the bustling Permian Basin by redeploying rigs there from Canada, Saudi Arabia and elsewhere in the U.S.
The company will move eight rigs to Texas to capitalize on increased customer demand, it announced on Monday, with units from the U.S. and Canada arriving in early to mid-2018, while the Saudi Arabian rigs are expected to begin work in the third quarter.
Trinidad expects to spend $27 million on upgrades to the rigs and $13 million on maintenance capital for the reactivation.
“Due to strong customer demand in the Permian Basin for high-specification, efficient equipment, Trinidad has chosen to redeploy idle assets from areas of weaker demand,” the company said.
“The costs to move three idle rigs from Saudi Arabia will be partly covered by Saudi customer-paid demobilization fees, with the remaining costs and the costs to move rigs within North America expected to be largely covered by Permian customers. The company is in active discussions with customers to sign one to two-year contracts for these rigs that include either pricing that steps up over time or has the ability to increase in line with commodity prices.”
Trinidad said it also plans to move four idle U.S. rigs to inventory, where they will be used to lower capital and operating costs on these and future rig upgrades.
Last week Calgary-based Akita Drilling announced it would redeploy “an ultra high-spec deep capacity rig” to the Permian Basin from natural gas drilling in Western Canada, where it had limited opportunities to work. The company began preparing to move two rigs to Texas in the third quarter of 2017.