Permian Basin drilling activity is picking up, and with that is a need for rigs with capability for longer laterals and bigger fracs.
Seeing increased demand from Texas customers, Calgary-based Trinidad Drilling is increasing its planned spend on rig upgrades this year by more than three-fold, from $22 million to $75 million.
"Market conditions have continued to improve in 2017," Trinidad CEO Brent Conway said in a statement.
"We are seeing growing demand from our customers for modern, high performance equipment and our increased capital program will allow us to capture these opportunities and drive increased activity and cash flow.”
Trinidad says it has reactivated 18 rigs in the U.S. since the beginning of the third quarter of 2016, the vast majority of which have been recently upgraded with changes similar to those planned for 2017.
The company plans to upgrade 27 rigs in 2017, with approximately two thirds of the upgrade capital directed towards its US fleet.
“The upgrade projects include increasing the pressure capacity of mud circulating systems to 7,500 PSI, adding mud pumps, moving systems and high-torque top drives, and making certain bi-fuel upgrades,” Trinidad said, adding that the capital program reflects customers’ changing requirements.
The rigs selected for upgrade are largely backed by contractual commitments for work, the company said.
“Trinidad expects that these upgrades will provide increased utilization and margins, and will improve the rigs long-term marketability.”
Trinidad’s fleet is comprised of 67 rigs operating in the U.S. and 71 in Canada, as well as 11 in Saudi Arabia, Mexico and UAE.
The company has increased its overall 2017 capital budget from $40 million to $95 million, which will be spent $75 million on the rig upgrades and $20 million on maintenance.