Interview With The CEO: Trinidad Drilling Ltd. (TDG) - Lyle C. Whitmarsh

Wall Street Transcript

67 WALL STREET, New York - February 6, 2012 - The Wall Street Transcript has just published its Oil & Gas: Exploration & Production Report offering a timely review of the sector to serious investors and industry executives. This 31 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: International Increase in Capital Expenditures - Rising Costs of Equipment and Services - Shale, Offshore and Deepwater Drilling - Consolidation to Achieve Economies of Scale

Companies include: Anadarko (APC); BP (BP); Baker (BHI); Cameron (CAM); Cenovus Energy Inc. (CVE); Chevron (CVX); and many more.

In the following brief excerpt from the Oil & Gas: Exploration & Production Report, expert analysts discuss the outlook for the sector and for investors.

Lyle C. Whitmarsh, Chief Executive Officer of Trinidad Drilling Ltd., has more than 15 years of oil and gas exploration experience. After graduating from high school, he gained many years of practical hands-on experience in the field by advancing through various positions until 1987, when he became a Rig Manager for Champion Drilling, a division of Artisan Drilling. In 1995, he advanced to Senior Field Supervisor, which included supervision of the crews and equipment for 24 drilling rigs in western Canada.

TWST: Please begin with brief introduction to Trinidad, including some highlights from your history and an overview of your primary operations and projects?

Mr. Whitmarsh: Trinidad started out originally as a small private company in Canada, more specifically in Alberta and Saskatchewan. It was founded in 1996 by the Heier family, who were in the oil and gas business, and Mike Heier, who is still our Chairman. Trinidad originally got its name because his mom was from Trinidad, and so he named it out of respect to her, and we have carried on that name throughout the company's history. We grew the business through the first few years, and we expanded into the U.S. in 2005. We now have more than 50% of our fleet in the U.S. and Mexico. So we've grown it from a small private company into what it is today. We have been able to look and identify changes in the environment based on what the well requirements are, and they were changing. Trinidad recognized that early and capitalized on it ahead of most of the industry with a new style of technically advanced drilling. We have been able to sign long-term-style contracts because of this, and we set the trend for the rest of the industry to follow. We have three operating divisions now with Canada, the U.S. and Mexico. And we also have our internal manufacturing group, which gives us an advantage when we are building the newer style of drilling equipment today.

TWST: Would you tell us about your professional background? In addition, I know you recently made some changes to Trinidad's management team. With that in mind, what do you believe are the key strengths of the company's core management team?

Mr. Whitmarsh: Not only myself, but many of the senior managers within Trinidad have a very operational-focused background. As for myself, I started out on the drilling rigs as a roughneck and worked my way up through various positions until joining Trinidad, where I started out as a Field Superintendent, and then eventually, worked my way up to where I am today as the CEO. And again, that's very common within Trinidad that we are all operationally focused. I think that gives us a very unique advantage when it comes to dealing with our customers and our employees. We keep very well connected to the field and to our employees and the issues our operators are faced with at the well. We bring a very interesting dynamic to the business and evaluate opportunities using this experience and operational understanding. Brent has recently been promoted to President. He has been with Trinidad since 2001, and we've worked together since then. We share very similar beliefs and strategies about performance, building high-quality equipment that meets our customers' needs and provides top performance within the industry. We are very excited for him and his new career, and we welcome all the challenges that lie ahead for us at Trinidad.

TWST: When you evaluate the outlook, say, for the next two to three years for your customers and/or your target market, what indicators do you have about demand for Trinidad's services over that time period?

Mr. Whitmarsh: It's difficult to clearly see over the next two or three years in a commodity-driven industry. So we try to mitigate that risk by using long-term, take-or-pay-style contracts to try to balance the market. We like to keep approximately 40% to 60% of our fleet under that style of contract so that we can manage the cycle within the business. Out of the 40% or 60% of that fleet, the average term on the rigs is generally between 1.5 and 2.5 years. These contracts provide a pay back on newly constructed rigs within approximately four years, and also give us revenue stream stability when the business is very cyclical in nature.

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