TDG: TSX $ CAN

Disclaimer

Trinidad Drilling Ltd. ("Trinidad") uses reasonable commercial efforts to ensure that the information contained on this web site is accurate but does not in any way guarantee the currency, accuracy, completeness, non-infringement or authenticity of such information. All information contained on this web site, including all stock price information, is provided for convenience and information purposes only and is not intended for trading, business, financial or other purposes. Your use of this site is in itself acceptance of the foregoing disclaimer.

News Releases

GET NEWS ALERTS BY EMAIL

Back to News Releases
Trinidad Drilling Ltd. announces first quarter results - March 31, 2008

    TSX SYMBOL: TDG

    CALGARY, May 7 /CNW/ - The following is management's discussion and
analysis ("MD&A") concerning the operating and financial results for the three
months ended March 31, 2008, and its outlook based on information available as
at April 30, 2008. The MD&A is based on the Trinidad Drilling Ltd. ("Trinidad"
or the "Company") unaudited interim consolidated financial statements for the
period ended March 31, 2008, which were prepared in accordance with Canadian
Generally Accepted Accounting Principles ("GAAP"). The MD&A should be read in
conjunction with the audited consolidated financial statements of Trinidad
Energy Services Income Trust (the "Trust") for the year ended December 31,
2007. Additional information is available on Trinidad's website
(www.trinidaddrilling.com) and all previous public filings, including the most
recently filed Annual Report and Annual Information Form, are available
through SEDAR (www.sedar.com). As a result of Trinidad's conversion from an
income trust to a corporation, effective March 10, 2008, references to the
"Company", "shares", the "Incentive Options Plan" and "options" should be read
as references to the "Trust", "units", "Unit Rights Incentive Plan" and
"rights", respectively, for periods prior to March 10, 2008.FINANCIAL HIGHLIGHTS

    Three months ended March 31,
    ($ thousands except share and per share data)          2008         2007
    -------------------------------------------------------------------------
    Revenue                                             219,651      206,211
    Gross margin(1)                                      98,428       93,017
    EBITDA(1)                                            88,669       80,527
      Per share (diluted)(1)                               0.86         0.95
    EBITDA before stock-based compensation(1)            88,838       81,302
      Per share (diluted)(1)                               0.87         0.96
    Cash flow from operations                            47,972       45,513
      Per share (diluted)                                  0.53         0.54
    Cash flow from operations before change
     in non-cash working capital(1)                      70,510       72,810
      Per share (diluted)(1)                               0.75         0.86
    Net earnings                                         38,912       41,943
      Per share (basic)                                    0.46         0.50
      Per share (diluted)                                  0.44         0.49
    Net earnings before stock-based compensation(1)      39,081       42,718
      Per share (diluted)(1)                               0.44         0.50
    Shares outstanding - basic
     (weighted average)(2)                           83,944,962   83,796,732
    Shares outstanding - diluted
     (weighted average)(2)                          102,627,104   84,865,852
    -------------------------------------------------------------------------
    (1) Readers are cautioned that gross margin, EBITDA, EBITDA before stock-
        based compensation, cash flow from operations before change in non-
        cash working capital and net earnings before stock-based compensation
        and the related per share information do not have a standardized
        meaning prescribed by GAAP - See "Non-GAAP Measures".
    (2) Basic shares include the weighted average number of shares
        outstanding over the period. Diluted shares include the weighted
        average shares outstanding over the period and the dilutive impact,
        if any, of the deemed conversion of convertible debentures and the
        shares issuable pursuant to the Incentive Option Plan. Interest
        expense incurred on the dilutive convertible debentures is added back
        to net earnings and to cash flow before change in non-cash working
        capital for the diluted per share calculation.


    OPERATING HIGHLIGHTS

    Three months ended March 31,                           2008         2007
    -------------------------------------------------------------------------
    Operating days - drilling
      Canada                                              4,009        3,817
      United States                                       3,675        2,464
    Rate per drilling day (CDN$)
      Canada                                             24,517       26,063
      United States(3)                                   21,735       25,506
    Utilization rate - drilling
      Canada                                                72%          69%
      United States                                         87%          85%
    CAODC industry average                                  56%          59%
    Number of drilling rigs
      Canada                                                 62           63
      United States                                          48           37
    Utilization rate for service rigs                       62%          73%
    Number of service rigs                                   20           20
    Number of coring and surface casing rigs                 20           17

    Barge Drilling Market(4)
    Operating days                                          272            -
    Rate per drilling day (CDN$)                         48,128            -
    Utilization rate                                        98%(5)         -
    Number of drilling rigs                                   1            -
    Number of drilling rigs under Bareboat
     Charter Agreements                                       3            -
    -------------------------------------------------------------------------
    (3) In US dollars dayrates remained relatively static declining from
        US$21,861 in the first quarter of 2007 to US$21,718 in the first
        quarter of 2008.
    (4) Trinidad commenced its operations in the barge drilling market with
        its acquisition of Axxis, effective July 5, 2007.
    (5) During the first quarter of 2008, Trinidad completed significant
        work to one of its barge rigs and as a result it was removed from
        service and not included in the utilization calculation.FORWARD-LOOKING STATEMENTS

    The MD&A contains certain forward-looking statements relating to
Trinidad's plans, strategies, objectives, expectations and intentions.
Expressions such as "anticipate", "expect", "project", "believe", "estimate",
and "forecast" should be used to identify these forward-looking statements.
Trinidad believes that the expressions reflected in those forward-looking
statements are reasonable; however, such statements are subject to a number of
known and unknown risks, uncertainties and other factors that may cause actual
results to differ materially from those anticipated in our forward-looking
statements. These statements speak only as of the date of the MD&A and
Trinidad does not intend, and does not assume any obligation, to update these
forward-looking statements subject to its obligations under appropriate
regulations.

    NON-GAAP MEASURES

    This MD&A contains references to the term "cash flow from operations
before change in non-cash working capital" to provide information for
shareholders regarding Trinidad's liquidity and ability to generate cash to
finance operations and assists management in assessing Trinidad's ability to
finance operational and capital expenditures; the term "EBITDA" to refer to
net earnings before interest, taxes, depreciation and gain or loss on sale of
long-term assets; the term "EBITDA before stock-based compensation" to refer
to EBITDA plus stock-based compensation; the term "gross margin" to refer to
revenue less operating expenses; the term "net earnings before stock-based
compensation" to refer to net earnings plus stock-based compensation; and the
term "net debt" to refer to Trinidad's long-term debt less its working capital
position which is indicative of the overall indebtedness of the Company, all
of which Trinidad believes are measures followed by the investment community
and therefore provide useful information. The terms "cash flow from operations
before change in non-cash working capital", "EBITDA", "EBITDA before
stock-based compensation", "gross margin", "net earnings before stock-based
compensation", "net debt" and associated per share data are not measures
recognized by GAAP and do not have standardized meaning prescribed by GAAP and
accordingly may not be comparable to similar measures presented by other
companies. However, Trinidad computes "cash flow from operations before change
in non-cash working capital", "EBITDA", "EBITDA before stock-based
compensation", "gross margin", "net earnings before stock-based compensation"
and "net debt" on a consistent basis for each reporting period.

    OVERVIEW

    Activity levels in the first quarter of 2008 were higher than originally
anticipated. Both the Canadian and United States markets generated
opportunities for Trinidad, providing the Company with a strong start to 2008.
Demand for drilling across the oil and gas industry increased as a result of
commodity prices gaining momentum due to reductions in natural gas storage
levels over the first quarter of 2008. Trinidad's continued focus on
delivering superior performance to its customers allowed the Company to exceed
industry utilization levels in Canada and continued expansion in the US
provided favourable returns. Rig utilization increased quarter-over-quarter
for both the Canadian and US operations, which, in addition to an increased
drilling rig fleet, provided Trinidad with strong revenue, gross margin and
EBITDA growth for the period. Although overall fundamentals have improved,
impacts of reduced market activity in Canada which caused reductions in
dayrates and cautious spending throughout the prior year can still be seen in
the current period. However, Trinidad is optimistic that the market is showing
signs of increased activity and that more improvements are to come. US
dayrates quarter-over-quarter remained substantially unchanged in US dollars;
however, in Canadian dollars have declined as a result of foreign currency
fluctuations.

    Trinidad's land rig count increased quarter-over-quarter, which resulted
in an increase in the number of drilling days by 22.3% in comparison to the
first quarter of 2007, resulting in increased revenue of $13.4 million or
6.5%. Overall revenue growth was predominately driven by the US operations and
with the increased fleet and strong market it continues to play a significant
role in the Company's overall portfolio. As a result, the US experienced
revenue growth of 34.2%, which offset the slight decline in the Canadian
operations. Since 2006, the US operations have added stability to Trinidad's
overall financial condition and the geographical diversification in the US has
positioned Trinidad well during this uncertain period in Canada. Customer
pricing for Trinidad's drilling rigs in Canada was down 5.9% from the first
quarter of 2007 due to a more competitive bidding environment with reduced
activity and greater equipment availability, while pricing in the first
quarter of 2007 reflected a continuation of the more robust market activity
from 2006. Although rates were down from the comparative quarter, relative to
the fourth quarter of 2007, the average operating dayrate for drilling rigs
remained consistent.

    Despite the revenue increases over the period, overall net earnings
declined by 7.2% mainly as a result of lower margins in the Canadian market
and increases in interest expense, depreciation, and reorganization costs.
Interest expense increased by 84.6% due to the issuance of convertible
debentures in July 2007, in connection with the Axxis acquisition, and
depreciation increased as a result of the deployment of new rigs and the
acquisition of Axxis. Furthermore, one-time reorganization costs for
Trinidad's conversion from an income trust to a corporation were incurred
throughout the period. This was offset by a foreign currency gain of
$4.4 million on US denominated intercompany balances of which $4.1 million was
unrealized.

    On January 10, 2008, the Trust announced its intent to convert from a
growth-oriented income trust to a growth-oriented, dividend-paying
corporation, which would pay a quarterly dividend of $0.15 per share
($0.60 per share per annum). This intention to convert arose from the federal
government's October 31, 2006 announcement to amend the tax policy related to
income trusts which would effectively tax distributions to unitholders from
the Trust. The board of directors and management based the decision to convert
on a number of underlying metrics intended to benefit Trinidad's investors. As
a corporation, Trinidad will not be limited by the "Normal Growth" provisions
imposed on income trusts by the federal government, and it will give Trinidad
the ability to reinvest funds that would otherwise have been distributed into
income-earning assets or used for debt reduction, improving the overall
financial position of the Company; thereby, strengthening the overall
positioning of Trinidad in the capital marketplace. On March 10, 2008,
unitholders and holders of the exchangeable shares voted, and overwhelmingly
approved, the conversion of the Trust into a public oil and natural gas
services corporation retaining the name "Trinidad Drilling Ltd." (the
"Arrangement").QUARTERLY ANALYSIS              2008                   2007
    ($ millions except per share
     and operating data)              Q1       Q4       Q3       Q2       Q1
    -------------------------------------------------------------------------
    Financial Highlights
    Revenue                        219.7    145.8    162.2    115.5    206.2
    Gross margin                    98.4     58.8     70.5     42.6     93.0

    Net earnings                    38.9     17.9     15.0      4.7     41.9
    Depreciation                    24.0     19.0     20.2     14.8     18.3
    (Gain) loss on assets           (0.1)     0.2        -      0.1      0.1
    Stock-based compensation         0.2      0.4      0.5      0.7      0.8
    Future income tax expense
     (recovery)                      9.4     (7.8)     3.3     (3.1)    10.2
    Effective interest on
     financing costs                 0.4      1.1      1.1      0.4      0.3
    Accretion on convertible
     debentures                      1.8      1.2      1.0        -        -
    Unrealized foreign
     exchange (gain) loss           (4.1)     0.2      5.3      5.8      1.2
    Other                              -        -        -        -        -
                                 --------------------------------------------
    Cash flow from operations
     before change in non-cash
     working capital                70.5     32.2     46.4     23.4     72.8

    Earnings per share (diluted)    0.44     0.21     0.18     0.05     0.49

    Cash flow from operations
     before change in non-cash
     working capital per share
     (diluted)                      0.75     0.38     0.55     0.27     0.86

    Operating Highlights
    Operating days - drilling
      Canada                       4,009    2,135    2,718    1,165    3,817
      United States                3,675    3,399    3,305    2,944    2,464
    Rate per drilling day (CDN$)
      Canada                      24,517   23,631   21,746   23,527   26,063
      United States(1)            21,735   21,404   23,265   24,927   25,506
    Utilization rate - drilling
      Canada                         72%      37%      47%      20%      69%
      United States                  87%      83%      85%      88%      85%
    CAODC industry average           56%      37%      39%      17%      59%
    Number of drilling rigs
      Canada                          62       64       64       64       63
      United States                   48       46       43       38       37
    Utilization for service rigs     62%      57%      46%      23%      73%
    Number of service rigs            20       20       20       21       20
    Number of coring and
     surface casing rigs              20       20       20       17       17

    Barge Drilling Market(2)
    Operating days                   272      352      352        -        -
    Rate per drilling day (CDN$)  48,128   47,536   51,904        -        -
    Utilization rate                 98%(3)   96%     100%        -        -
    Number of drilling rigs            1        1        1        -        -
    Number of drilling rigs under
     Bareboat Charter Agreements       3        3        3        -        -
    -------------------------------------------------------------------------


    QUARTERLY ANALYSIS                            2006
    ($ millions except per share
     and operating data)              Q4       Q3       Q2       Q1
    ----------------------------------------------------------------
    Financial Highlights
    Revenue                        161.9    150.6    104.5    162.9
    Gross margin                    74.9     66.9     43.1     84.7

    Net earnings                    31.3     31.6     20.8     40.0
    Depreciation                    15.4     14.0      9.7     13.1
    (Gain) loss on assets            0.1     (2.0)       -        -
    Stock-based compensation         1.8      0.7      0.8      3.8
    Future income tax expense
     (recovery)                      6.2      4.6     (8.7)    13.9
    Effective interest on
     financing costs                   -        -        -        -
    Accretion on convertible
     debentures                        -        -        -        -
    Unrealized foreign
     exchange (gain) loss           (0.1)       -      0.2     (0.2)
    Other                              -      0.1     (0.3)     0.1
                                 -----------------------------------
    Cash flow from operations
     before change in non-cash
     working capital                54.7     49.0     22.5     70.7

    Earnings per share (diluted)    0.37     0.38     0.24     0.48

    Cash flow from operations
     before change in non-cash
     working capital per share
     (diluted)                      0.65     0.57     0.26     0.84

    Operating Highlights
    Operating days - drilling
      Canada                       3,163    3,358    1,826    4,184
      United States                2,105    1,891    1,603    1,447
    Rate per drilling day (CDN$)
      Canada                      26,328   23,083   23,927   23,579
      United States(1)            24,621   24,042   24,089   21,596
    Utilization rate - drilling
      Canada                         61%      64%      36%      86%
      United States                  85%      85%      82%      85%
    CAODC industry average           47%      57%      34%      81%
    Number of drilling rigs
      Canada                          60       59       57       56
      United States                   31       26       22       21
    Utilization for service rigs     64%      68%      31%      85%
    Number of service rigs            18       18       17       17
    Number of coring and
     surface casing rigs              17       17       17       17

    Barge Drilling Market(2)
    Operating days                     -        -        -        -
    Rate per drilling day (CDN$)       -        -        -        -
    Utilization rate                   -        -        -        -
    Number of drilling rigs            -        -        -        -
    Number of drilling rigs under
     Bareboat Charter Agreements       -        -        -        -
    ----------------------------------------------------------------
    (1) In US dollars dayrates remained relatively static quarter-over-
        quarter and declines are the result of reductions in US currency
        rates.
    (2) Trinidad commenced its operations in the barge drilling market with
        its acquisition of Axxis, effective July 5, 2007.
    (3) During the first quarter of 2008, Trinidad completed significant
        work to one of its barge rigs and as a result it was removed from
        service and not included in the utilization calculation.

    Trinidad's revenue has continued to grow since 2006 as a result of
acquisitions, the continued deployment of rigs under the rig construction
program that was initiated in 2005 and the strong market conditions that were
present in early 2006. Towards the end of 2006 and throughout 2007, Canadian
drilling operations faced declining market conditions as a result of lower
commodity prices and concerns over high storage levels. This decreased
Canadian dayrates and resulted in lower utilization levels from the second
quarter of 2007 onwards, in comparison to the same period in the prior year.
Quarterly revenues continued to be impacted by the seasonal conditions present
in the Western Canadian drilling operations, which resulted in strong revenue
in the first quarters as oil and gas companies took advantage of frozen
conditions, slower second quarters due to spring break-up conditions and third
and fourth quarters which were more representative of normal operating
conditions. This seasonality has been partially mitigated as a result of the
Company's expansion into the US, which has been ongoing since the end of 2005.
This expansion has more than doubled the US rig count since the first quarter
of 2006 and added diversification into the barge drilling market in the third
quarter of 2007. The first quarter of 2008 showed signs of improvements in the
Western Canadian drilling market as dayrates and utilization levels increased
creating a positive outlook moving forward.

    Net earnings and per share data was strong throughout 2006 and the first
quarter of 2007 as the market activities, noted above, allowed for the Company
to realize growth through its expansion into new markets and its rig
diversification. However, the market downturn in Canadian drilling during the
second quarter of 2007, as well as unrealized foreign exchange losses
throughout the period due to declines in the US currency, caused a decrease in
net income and the related per share data to the end of 2007. Upturn in the
Canadian market has been noted in 2008 and the US dollar has strengthened
which has increased net income and related per share amounts.

    RESULTS FROM OPERATIONS

    Canadian Drilling Operations

    Three months ended March 31,
    ($ thousands except percentages
     and operating data)                      2008         2007     % Change
    -------------------------------------------------------------------------
    Revenue                                132,104      135,085         (2.2)
    Operating expense                       72,262       71,932          0.5
                                       --------------------------------------
    Gross margin                            59,842       63,153         (5.2)
                                       --------------------------------------
    Gross margin percentage                  45.3%        46.8%

    Operating days - drilling                4,009        3,817          5.0
    Rate per drilling day (CDN$)            24,517       26,063         (5.9)
    Utilization rate - drilling                72%          69%          4.3
    CAODC industry average                     56%          59%         (5.1)
    Number of drilling rigs                     62           63         (1.6)

    Utilization rate - well servicing          62%          73%        (15.1)
    Number of service rigs                      20           20            -
    Number of coring and surface
     casing rigs                                20           17         17.6Trinidad's results from Canadian operations for the three months ended
March 31, 2008, continued to reflect the reduced industry fundamentals that
were present throughout 2007, as the reduction in dayrates that occurred
throughout the prior year continued to reduce revenue quarter-over-quarter. In
addition, the transfer of two rigs from the Canadian fleet to the US further
decreased revenues in comparison to the same period in 2007. However, compared
to the fourth quarter of 2007, activity levels and equipment utilization rates
continued to show signs of improvement. Utilization for the first quarter
strengthened as lower natural gas storage levels and stronger commodity
pricing increased activity across the services sector. This contributed to
improved dayrates from the latter part of 2007 and an increase in the number
of operating days in comparison with the first quarter of prior year. All
factors seem to be pointing to improvements in the Canadian drilling sector
and Trinidad is cautiously optimistic that the market is moving to more
favourable conditions. Trinidad continued to exceed average industry
utilization and for the first quarter of 2008 exceeded it by 28.6% due to its
focus on the deeper drilling market and long-term take-or-pay contracts, but
did experience a 2.2% decline in revenue as a result of pricing declines.

    Trinidad's drilling division provided 72.6% of the total revenue from the
Canadian drilling segment compared to 73.6% in the prior year, contributing to
the majority of the decline in revenue year-over-year. Well servicing also
declined as a direct result of the overall market slow-down in Western Canada,
and reduced rates carried over from 2007. Trinidad's surface casing and coring
division was the only division with increased revenue year-over-year as a
result of the addition of three rigs and increased work in the oil sands
throughout the period, producing higher revenue and stronger margins.

    Operating expenses in Trinidad's Canadian drilling operations remained
relatively consistent with prior year levels at $72.3 million in 2008 as
compared to $71.9 million in 2007. On a per day basis, costs
quarter-over-quarter were reduced by 4.4% from $18,845 per day down to $18,025
per day in 2008 due to more conservative spending as a result of slower market
conditions during the latter half of 2007 and increased focus on cost
controls. Gross margins however declined year-over-year due to reduced revenue
from lower dayrates throughout the period.

    The Alberta government's announcement of its "New Royalty Framework" in
2007 continued to create uncertainty in the oil and gas industry in Alberta.
Exploration and production companies continue to assess the financial impact
that the proposed new royalty rate structure will have on the long-term
economic viability of capital projects. However, the Alberta government's
final recommendations included some adjustments including some positive
concessions that were made for deep drilling. Given Trinidad's continued focus
on this deeper drilling market these concessions should be positive moving
forward; however, both the near and long-term impact to Trinidad will be
dependent on its customers' capital spending plans for 2008 and beyond.United States Drilling Operations

    Three months ended March 31,
    ($ thousands except percentages
     and operating data)                      2008         2007     % Change
    -------------------------------------------------------------------------
    Revenue                                 84,313       62,840         34.2
    Operating expense                       46,442       34,161         36.0
                                       --------------------------------------
    Gross margin                            37,871       28,679         32.1
                                       --------------------------------------
    Gross margin percentage                  44.9%        45.6%

    Land Drilling Rigs
    Operating days - drilling                3,675        2,464         49.1
    Rate per drilling day (CDN$)(1)         21,735       25,506        (14.8)
    Utilization rate - drilling                87%          85%          2.4
    Number of drilling rigs                     48           37         29.7

    Barge Drilling Rigs(2)
    Operating days - drilling                  272            -            -
    Rate per drilling day (CDN$)            48,128            -            -
    Utilization rate - drilling                98%(3)         -            -
    Number of drilling rigs                      1            -            -
    Number of drilling rigs under
     Bareboat Charter Agreements                 3            -            -

    (1) In US dollars dayrates remained relatively static declining from
        US$21,861 in the first quarter of 2007 to US$21,718 in the first
        quarter of 2008.
    (2) Trinidad commenced its operations in the barge drilling market with
        its acquisition of Axxis, effective July 5, 2007.
    (3) During the first quarter of 2008, Trinidad completed significant
        work to one of its barge rigs and as a result it was removed from
        service and not included in the utilization calculation.Trinidad's US operation continues to be key in the overall success of the
Company, as this segment maintains strong earnings and has added significantly
to the overall growth of the business. Revenue increased by 34.2%
quarter-over-quarter due almost entirely to the new rigs deployed in 2007 and
the acquisition of Axxis. Over the course of 2007, the US deployed five new
land rigs, as part of Trinidad's rig build program, all secured by long-term
take-or-pay contracts, and added an additional four land rigs and one barge
rig to Trinidad's fleet through the acquisition of Axxis. In addition, during
the latter part of 2007, one of Trinidad's customers requested the transfer of
two Canadian rigs committed under the original take-or-pay contracts to the US
in exchange for the extension of the current contract for five years with an
increase in the number of committed days per year. This transfer was
successfully completed during the first quarter of 2008. This increased the
overall rig count significantly, resulting in the US operating a fleet of
48 drilling rigs at March 31, 2008. This growth has been instrumental in
achieving stability of Trinidad's overall financial results and increasing the
capability of Trinidad to meet the needs of oil and gas producers on a more
comprehensive basis.

    Average dayrates in Canadian dollars saw a sharp decline of 14.8%
quarter-over-quarter due entirely to the foreign exchange translation as a
result of the declining strength of the US dollar. However, in US dollars, the
average dayrate for the first quarter of 2007 was US$21,861, in comparison
with US$21,718 in 2008, remaining relatively static quarter-over-quarter.
Barge drilling had a softer quarter as compared to the fourth quarter of 2007
as a result of one of the barge rigs under the Bareboat Charter not operating
over the period due to scheduled maintenance to overhaul its living quarters
which reduced drilling days from 352 days to 272 days. This required
maintenance was completed at the end of the first quarter and the rig is now
operational. However, the cost of maintaining crews and related operating
expenses while the required maintenance was being completed, coupled with the
loss of revenue, resulted in a loss on the Bareboat Charter of $1.4 million
for the quarter which caused gross margins to decline in comparison with the
fourth quarter of 2007. Despite this, the barge market continues to command
much higher dayrates than the land drilling market and as a result these rigs
have provided exceptional dayrates of $48,128 per day with utilization levels
of 98%. In addition, the barge rigs have added asset and geographical
diversification to the asset base, presenting Trinidad with significant
opportunities to grow in other jurisdictions.Construction Operations

    Three months ended March 31,
    ($ thousands except percentage data)      2008         2007     % Change
    -------------------------------------------------------------------------
    Revenue(1)                              11,591       30,608        (62.1)
    Operating expense(1)                    10,876       29,423        (63.0)
                                       --------------------------------------
    Gross margin                               715        1,185        (39.7)
                                       --------------------------------------
    Gross margin percentage                   6.2%         3.9%

    (1) Includes inter-segment revenue and costs of $8.4 million (2007 -
        $22.3 million).Revenue from Trinidad's construction operations decreased by 62.1% from
$30.6 million in the first quarter of 2007 to $11.6 million in 2008 as a
result of the completion of Trinidad's rig construction program in the latter
part of 2007, which substantially reduced inter-segment revenue and operating
costs to only $8.4 million from $22.3 million in the first quarter of 2007.
During the first quarter of 2007, Mastco concentrated its operations on
completing Trinidad's rig construction program and supported the deployment of
three Canadian rigs and seven US rigs. With the rig build program completed,
Mastco's revenue declined quarter-over-quarter; however, additional
inter-segment construction work in the first quarter of 2008 consisted of the
construction of a second barge rig for the Axxis division and retro-fitting
two Canadian rigs to be transferred to the US. Gross margin percentage was
positively affected by the decrease in inter-segment revenue as it provided
Mastco with additional opportunities and capacity to capture third party sales
and profits.

    The second quarter of 2008 will result in additional inter-segment
revenue such as recertification and repair work which generally occurs after
spring break-up when rigs are less utilized. As drilling services experienced
a busy first quarter no recertification work was able to be completed during
this time. The construction operations will continue to assist in the
production of the Axxis barge, which Trinidad anticipates will be completed
late in the second quarter of 2008.GENERAL AND ADMINISTRATIVE

    Three months ended March 31,
    ($ thousands except percentage data)      2008         2007     % Change
    -------------------------------------------------------------------------
    General and administrative              11,423       10,429          9.5
    % of revenue                              5.2%         5.1%General and administrative expenses increased 9.5% to $11.4 million in
the first quarter of 2008 from $10.4 million in 2007. The expansion of
Trinidad's business through the acquisition of Axxis in July 2007, and the
higher overhead expenses in the US operations as a result of its growth over
the last year were the main reasons for the increase. General and
administrative costs have been maintained at levels consistent with the fourth
quarter of 2007. Despite the overall increase, Trinidad continues to focus on
maintaining conservative expenditure levels to ensure growth for shareholders
by creating internal efficiencies, centralizing certain required functions and
integrating its management team. This focus has enabled overall stability in
general and administrative expenses as a percentage of revenue between 2007
and 2008.

    During the first quarter Trinidad reclassified several costs associated
with field management, equipment insurance and property taxes on the US rigs
into operating expenses from general and administrative expenses to better
align the Company with current industry standards and allow for increased
consistency amongst Trinidad's peer group. Comparative figures have been
reclassified.INTEREST

    Three months ended March 31,
    ($ thousands)                             2008         2007     % Change
    -------------------------------------------------------------------------
    Interest on long-term debt               6,757        8,226        (17.9)
    Effective interest on deferred
     financing costs                           418          349         19.8
                                       --------------------------------------
                                             7,175        8,575        (16.3)
                                       --------------------------------------

    Interest on convertible debentures       6,828            -            -
    Effective interest on deferred
     financing costs                           658            -            -
    Accretion of convertible debenture       1,168            -            -
                                       --------------------------------------
                                             8,654            -            -
                                       --------------------------------------Towards the end of the first quarter of 2007, Trinidad was nearing the
completion of its rig construction program, which required intensive capital
expenditures primarily funded through the debt facility. As the capital
required to complete this construction program was drawn predominately from
the debt facilities that were in place it resulted in higher than average
indebtedness for the Company. As a result, at the end of the first quarter of
2007, Trinidad's long-term debt reached $471.7 million, in comparison to
$422.0 million at the end of the first quarter of 2008. The higher debt levels
in 2007 resulted in increased interest expense over the current quarter. In
addition, reductions in the BA and LIBOR rates in 2008 compared to 2007
reduced the effective interest on both the US and Canadian term facilities
year-over-year, which in turn had a favourable impact on interest expense.

    Effective July 5, 2007, Trinidad completed the issuance of $354.3 million
in convertible unsecured subordinated debentures in order to complete the
acquisition of Axxis. Proceeds in excess of the purchase price were used to
repay $187.8 million of the Canadian revolving facility, which significantly
reduced the debt drawn under the facility as at March 31, 2008. Interest on
the convertible debentures is paid semi-annually at a coupon rate of 7.75% and
for the three months ended March 31, 2008 Trinidad recorded associated
interest expense of $6.8 million. The fixed interest rate on the convertible
debentures will reduce Trinidad's exposure to interest rate fluctuations and
further enhance cash flow stability. Additionally, Trinidad has the option to
redeem the debentures in whole or in part at a redemption price of $1,000
after December 31, 2010 and before their maturity date, but on redemption or
maturity, Trinidad may elect to satisfy its obligation to repay the principal
by issuing shares.STOCK-BASED COMPENSATION

    Three months ended March 31,
    ($ thousands)                             2008         2007     % Change
    -------------------------------------------------------------------------
    Stock-based compensation                   169          775        (78.2)As a result of the Arrangement, Trinidad's former Unit Rights Incentive
Plan was rolled into the Incentive Option Plan (the "Plan"), which is used to
assist directors, officers, employees and consultants of Trinidad and its
affiliates to participate in the growth and development of the Company.
Trinidad uses the fair value method to calculate compensation expense
associated with options granted under the Plan. Compensation expense is then
recognized in earnings over the vesting period of the options granted with a
corresponding increase in contributed surplus. As of the fourth quarter of
2007, substantially all of the 2006 options had been expensed and as a result
stock-based compensation decreased from $0.8 million in the first quarter of
2007 to $0.2 million in 2008. Total 2007 option issuances amounted to 63,486
in comparison to no issuances during the same period of 2008, further
contributing to the decline quarter-over-quarter.FOREIGN EXCHANGE (GAIN) LOSS

    Three months ended March 31,
    ($ thousands)                             2008         2007     % Change
    -------------------------------------------------------------------------
    Foreign exchange (gain) loss            (4,382)       1,286        440.7Trinidad's US operations have continued to grow and contributed
significantly to the overall operations of the Company. As a result, upon
consolidation Trinidad's US operations are considered to be self-sustaining
and therefore gains and losses due to fluctuations in the foreign currency
exchange rates are recorded to Other Comprehensive Income ("OCI") and recorded
on the balance sheet as a component of equity. However, gains and losses in
the Canadian entity on US denominated balances continue to be recognized in
the income statement. For the first quarter of 2008, Trinidad recognized a
gain of $4.4 million in comparison with a loss of $1.3 million in 2007.
Slightly higher intercompany balances, coupled with the increases in the value
of the US dollar over the first quarter of 2008 in comparison with declines
over the comparable period in the prior year were the main factors for the
variance quarter-over-quarter. The $4.4 million gain corresponds to an equal
and offsetting unrealized loss in the US subsidiary included in OCI.DEPRECIATION

    Three months ended March 31,
    ($ thousands)                             2008         2007     % Change
    -------------------------------------------------------------------------
    Depreciation                            23,992       18,258         31.4
    (Gain) loss on sale of assets              (93)          44        311.4Depreciation increased 31.4% from $18.3 million in the first quarter of
2007 to $24.0 million in the same quarter of 2008. Changes in the composition
of Trinidad's asset base through the rig construction program resulted in the
addition of drilling rigs with increased drilling depth; therefore
incrementally adding to the capital cost of Trinidad's asset base. This
increased the per day depreciation rates for the Canadian drilling segment by
$228 per drilling day to $2,699 in the first quarter of 2008 from $2,471 in
the comparable quarter of 2007. Increased rates per drilling day, compounded
by an increase in the number of drilling days in Canada from 3,817 in the
first quarter of 2007 to 4,009 in the current quarter, resulted in an
increased depreciation expense from the Canadian operations
quarter-over-quarter of $1.4 million. Depreciation in the US market also
increased quarter-over-quarter as the rates per drilling day increased by
US$419 from US$3,019 in the first quarter of 2007 to US$3,438 in 2008 as a
result of higher cost of capital on the rigs released under the rig
construction program and the Axxis acquisition. This increased rate per
drilling day was offset almost entirely by declining US foreign currency
rates, resulting in the rates per drilling day in Canadian dollars remaining
relatively static quarter-over-quarter. However, static rates per drilling day
in Canadian dollars, coupled with a 52.8% increase in US drilling days from
2,464 in the prior quarter to 3,766, including land rigs and the owned barge
rig in the current quarter, increased depreciation expense in the US
operations by 49.9%.REORGANIZATION COSTS

    Three months ended March 31,
    ($ thousands)                             2008         2007     % Change
    -------------------------------------------------------------------------
    Reorganization costs                     2,549            -           -On January 10, 2008, the Trust announced its intent to convert from a
growth-oriented income trust to a growth-oriented, dividend-paying
corporation, subject to unitholder and regulatory approval. On March 10, 2008,
unitholders and holders of the exchangeable shares voted, and overwhelmingly
approved, the conversion of the Trust into a public oil and natural gas
services corporation retaining the name "Trinidad Drilling Ltd.". As a result
of this reorganization Trinidad incurred one-time costs of $2.5 million
relating to this conversion which included charges for shareholder
communication, legal counsel, development and execution of fairness opinions
and charges in relation to revising and updating necessary legal documents for
Trinidad's new corporate structure. As of March 31, 2008, Trinidad believes it
has incurred the majority of the charges in relation to the conversion from an
income trust to a corporation.INCOME TAXES

    Three months ended March 31,
    ($ thousands)                             2008         2007     % Change
    -------------------------------------------------------------------------
    Current income tax                         631        1,473        (57.2)
    Future income tax                        9,398       10,234         (8.2)Current income tax expense of $0.6 million decreased by 57.2% from the
same period in 2007 as a result of reorganizations completed at the beginning
of 2008 to amalgamate the surface casing and coring division and the drilling
division, ultimately increasing the tax shield the Company had on earnings
from oil sands coring work. As a result of improved shielding capabilities
there were no current taxes recorded on these net earnings in 2008, reducing
the current tax expense quarter-over-quarter. However, this was offset by
increased revenues generated by one of Trinidad's smaller manufacturing
divisions, not present in 2007, whose taxable earnings surpassed the allowable
deductions creating a small current tax liability.

    Future income tax expense declined by 8.2% in the first quarter from
$10.2 million in 2007 to $9.4 million which was not in proportion to the
decline in net earnings from the first quarter of 2007 to the first quarter of
2008. This was primarily the result of the lower future income tax rates as a
result of changes in the Federal Budget. Bill C-28, which received Royal
Assent on December 14, 2007, called for a graduated reduction in the federal
corporate tax rate to 15.0% by 2011 and beyond. Bill C-13, which received
Royal Assent on June 22, 2006, called for the elimination of the corporate
surtax, which resulted in a lower future tax liability on the reversal of
current temporary differences. Further, as a result of the elimination of the
trust structure in the first quarter of 2008, several future tax losses which
had been recorded at the end of 2007 are now expected to reverse sooner than
they would have under the trust regime. Therefore, these tax assets will
reverse sooner, at higher tax rates, reducing the future income tax expense
for the first quarter of 2008.NET EARNINGS AND CASH FLOW

    Three months ended March 31,
    ($ thousands except per share data)       2008         2007     % Change
    -------------------------------------------------------------------------
    Net earnings                            38,912       41,943         (7.2)
      Per share (diluted)                     0.44         0.49        (10.2)
    Cash flow from operations               47,972       45,513          5.4
      Per share (diluted)                     0.53         0.54         (1.9)
    Cash flow from operations before
     change in non-cash working capital     70,510       72,810         (3.2)
      Per share (diluted)                     0.75         0.86        (12.8)Trinidad experienced a decline in consolidated net earnings
quarter-over-quarter of $3.0 million, or 7.2%, from $41.9 million in 2007 to
$38.9 million in 2008. This was primarily influenced by reduced dayrates in
the Canadian drilling segment as well as interest expense on the convertible
debentures, increased depreciation and the incurrence of costs associated with
the reorganization of Trinidad into a new corporate structure. These were
partially offset by overall growth in the Company's US operations, as well as
the unrealized foreign exchange gain due to strengthening of the US dollar.
Gross margin in the US operations also increased by 32.1% to $37.9 million for
the period ending March 31, 2008, which consisted of incremental margin from
the Axxis acquisition as well as the additional revenue generated from rig
deployments. The results of the US segment were offset by a 5.2% decline in
the gross margin of the Canadian operations which were down from $63.2 million
to $59.8 million due to the reduced activity in the Canadian market and the
associated impact on dayrates. The impact of this downturn was minimized as a
result of the long-term contracts that the Company has secured as well as its
focus on deeper drilling which allowed Trinidad to perform at utilization
levels above the industry average for the quarter. There are also several
indicators that show improved market conditions are returning, which is
anticipated to have a positive impact for Trinidad having weathered the storm
in the Canadian market.

    Cash flow from operations for the first quarter increased by 5.4% from
$45.5 million ($0.54 per share (diluted)) to $48.0 million ($0.53 per share
(diluted)) and cash flow from operations before change in non-cash working
capital for the same period decreased by $2.3 million from $72.8 million
($0.86 per share (diluted)) in the first quarter of 2007 to $70.5 million
($0.75 per share (diluted)) in 2008. The change was primarily due to
incremental interest paid on the convertible debentures. Despite the increase
in interest expense, overall stability was achieved through strong results in
the US operations where higher revenues in the US offset lower margins in the
Canadian segment. Trinidad continues to follow an investment strategy designed
to ensure growth for shareholders through capital appreciation through the
pursuit of opportunities including the expansion into the US market as well as
diversification of the overall asset base.LIQUIDITY AND CAPITAL RESOURCES                    March 31, December 31,
    ($ thousands except percentages)                       2008         2007
    -------------------------------------------------------------------------
    Working capital                                     133,765       84,101

    Current portion of long-term debt                     1,813        1,679
    Convertible debentures(1)                           317,817      315,991
    Long-term debt(1)                                   420,217      402,489
                                                    -------------------------
    Total debt                                          739,847      720,159
                                                    -------------------------
    Total debt as a percentage of assets                  46.9%        48.1%

    Net debt                                            604,269      634,379
    Net debt as a percentage of assets                    38.3%        42.4%

    Total assets                                      1,577,470    1,497,156
    Total long-term liabilities                         799,439      764,102
    Total long-term liabilities as a percentage
     of assets                                            50.7%        51.0%

    Shareholders' equity                                675,014      634,502
    Total debt to shareholders' equity                   109.6%       113.5%
    Total debt to shareholders' equity -
     assuming debenture conversion                        42.5%        42.5%
    Net debt to shareholders' equity                      89.5%       100.0%

    (1) Convertible debentures and long-term debt are reflected net of
        associated transaction costs.In the current quarter, Trinidad drew an additional $16.0 million on the
Canadian revolving credit facility, resulting in a 4.4% increase in long-term
debt from $404.2 million at year-end to $422.0 million at March 31, 2008.
These advances, together with internally generated cash flow, were used
throughout the quarter to fund additional capital requirements of
$30.3 million on the construction of the additional barge rig in the US,
completion of moving systems designed for the Canadian market which will allow
for operators to drill multiple wells from one drilling pad and retrofitting
the two rigs which were transferred from the Canadian to the US operations. In
addition, cash distributions of $17.8 million were paid throughout the period
from internally generated cash flow. With the completion of the rig
construction program Trinidad's capital requirements have been reduced
significantly over the prior year and less cash was required from the debt
facility to fund ongoing operations. As a result, moving forward, Trinidad
will be able to focus on utilizing available cash flow to improve the
Company's overall leverage and on new growth opportunities.

    In order to fund the acquisition of Axxis, Trinidad completed the
issuance of $354.3 million convertible debentures (see below). The
classification of the convertible debentures as debt on the face of the
balance sheet has resulted in the Company appearing highly leveraged as at
March 31, 2008. However, at maturity or redemption the Company may elect to
satisfy its obligation to repay the principal by issuing shares at a price
equal to 95.0% of the weighted average trading price of the shares. Trinidad
believes that this debt position will be short-lived as the Company realizes
the intrinsic benefits of prior acquisitions and improved markets in 2008 and
beyond.

    Working capital increased by $49.7 million from the end of the prior
year, which is directly attributable to an increase in accounts receivable of
$52.9 million which was partially offset by a slightly higher payables balance
and lower cash at the end of the quarter. As a result of the cyclical nature
of the drilling services, receivables and payables tend to be higher as spring
break-up starts from the high activity levels that were present throughout the
period. Furthermore, a current future income tax asset was recorded at the end
of the first quarter as a result of Trinidad moving to a corporate structure
which has also increased the working capital position of Trinidad.

    Shareholders' equity increased by $40.5 million from the prior year-end
due to $34.7 million of net earnings generated from operations throughout the
period, net of dividends declared to shareholders. Further, Trinidad
distributed an additional $8.4 million to unitholders prior to the conversion
to a corporation which also reduced shareholders' equity. Accumulated Other
Comprehensive Income, which is comprised of gains and losses on the
translation of the Company's foreign subsidiaries and the fair value of
Trinidad's interest rate swaps, increased shareholders' equity by
$13.9 million over the period as a result of strengthening of the US dollar
and reductions in the future expected interest rates, respectively.

    The first quarter of 2008 has showed signs of strengthening in the
Canadian market and as demand for drilling increased dayrates and utilization
levels and the US operations sustained high utilization rates and drilling
activity. The acquisition of Axxis in the third quarter of 2007 has been
positive for the Company, adding diversification to the current drilling
fleet, and providing increased opportunities for expansion. These factors have
allowed Trinidad to strengthen its capital position throughout the quarter,
reducing net debt levels by $30.1 million to $604.3 million at March 31, 2008.
In addition, net debt as a percentage of assets also declined by 9.7% from
42.4% to 38.3% and debt to shareholders' equity has remained consistent since
year-end maintaining Trinidad's overall leverage.

    Convertible debentures

    In connection with the acquisition of Axxis, Trinidad issued
$354.3 million in unsecured subordinated convertible debentures, of which
$325.0 million was issued through a public offering and $29.3 million was
issued to the former owners of Axxis. The debentures are convertible into
shares of Trinidad at the option of the holder at any time prior to maturity
at a conversion price of $19.30 per share. They have a face value of $1,000, a
coupon rate of 7.75%, and mature July 31, 2012, with interest being paid
semi-annually on June 30 and December 31. Trinidad has the option to redeem
the debentures in whole or in part at a redemption price of $1,000 after
December 31, 2010 and before their maturity date. On redemption or maturity,
Trinidad may elect to satisfy its obligation to repay the principal by issuing
common shares.

    The value of the conversion feature at the time of issuance was
determined to be $28.2 million and has been recorded as equity with the
remaining $326.1 million allocated to long-term debt, net of $13.6 million of
transaction costs. The debentures are being accreted such that the liability
at maturity will equal the face value of $354.3 million. As at March 31, 2008
there had been no conversions of these debentures.SHAREHOLDERS' EQUITY                               March 31, December 31,
    ($ thousands)                                          2008         2007
    -------------------------------------------------------------------------
    Shareholders' equity                                678,339            -
    Unitholders' capital                                      -      675,728
    Exchangeable shares                                       -        2,477On January 10, 2008, the Trust announced its intent to convert from a
growth-oriented income trust to a growth-oriented, dividend-paying
corporation. On March 10, 2008, unitholders and holders of the exchangeable
shares voted, and overwhelmingly approved, the conversion of the Trust into a
public oil and natural gas services corporation retaining the name "Trinidad
Drilling Ltd.". As a result of this conversion unitholders and holders of the
exchangeable shares received shares in the newly created corporation on a 1:1
basis, after giving effect to the exchange ratio on the exchangeable shares at
the time of conversion. As a result, unitholders' capital was transferred into
shareholders' equity during the quarter.

    Shareholders' equity increased from year-end by $2.6 million, with the
conversion of 253,430 Series A exchangeable shares ($2.0 million) to
352,328 common shares, as well as the conversion of 47,169 Series C
exchangeable shares ($0.5 million) to 59,905 common shares and 12,225 shares
issued for options exercised ($0.1 million). Shareholders' equity on April 30,
2008 was $678.6 million (84,064,499 shares).

    SEASONALITY

    Trinidad operates a substantial number of rigs in Western Canada and
therefore operations are heavily dependent upon the seasons. The winter
season, which incorporates the first quarter, is a busy period as oil and gas
companies take advantage of frozen conditions to move drilling rigs into
regions which might otherwise be inaccessible to heavy equipment due to swampy
conditions. The second quarter normally encompasses a slow period referred to
as spring break-up. During this period melting conditions result in temporary
municipal road bans that effectively prohibit the movement of drilling rigs.
The third and fourth quarters are usually representative of average activity
levels.

    Trinidad's expansion to the US market has reduced its overall exposure to
the seasonal factors that are present in its Canadian operations. These
seasonal conditions typically limit Canadian drilling activity, whereas in the
United States operators have more flexibility to work throughout the year.
This increased number of operating days throughout the year has allowed
Trinidad to better manage its business with more sustainable cash flow
throughout the annual cycle.

    CRITICAL ACCOUNTING ESTIMATES

    The preparation of the unaudited interim consolidated financial
statements requires that certain estimates and judgements be made with regard
to the reported amount of revenues and expenses and the carrying values of
assets and liabilities. These estimates are based on historical experience and
management judgement. Anticipating future events involves uncertainty and
consequently the estimates used by management in the preparation of the
unaudited interim consolidated financial statements may change as future
events unfold, additional experience is acquired or Trinidad's operating
environment changes.

    Depreciation

    The accounting estimate that has the greatest impact on Trinidad's
financial results is depreciation. Depreciation of Trinidad's property and
equipment incorporates estimates of useful lives and residual values. These
estimates may change as more experience is obtained or as general market
conditions change impacting the operation of Trinidad's capital assets.

    Stock-based compensation

    Compensation expense associated with options at grant date are estimates
based on various assumptions such as volatility, annual dividend yield, risk
free interest rate and expected life using the Black-Scholes methodology to
produce an estimate of the fair value of such compensation.

    Allowance for doubtful accounts receivable

    Trinidad performs credit evaluations of its customers and grants credit
based on past payment history, financial conditions and anticipated industry
conditions. Customer payments are regularly monitored and a provision for
doubtful accounts is established based on specific situations and overall
industry conditions. Trinidad's history of bad debt losses has been minimal
and generally limited to specific customer circumstances; however, given the
cyclical nature of the oil and gas industry, the credit risks can change
suddenly and without notice.

    Goodwill

    In accordance with Canadian GAAP, Trinidad performs an annual goodwill
impairment each fiscal year and sooner when changing circumstances indicate a
possible impairment exists. In accordance with this, Trinidad performed its
impairment test as at December 31, 2007, and no goodwill impairment existed.
As at March 31, 2008, no changes in circumstances indicate that this
assessment should be re-performed.

    Fair value of interest rate swaps

    The fair value of the interest rate swaps are estimated based on future
projected interest rates and adjusted on a quarterly basis for monthly
settlements and changes in projections. Trinidad receives the valuation from
the contract counterparty on a quarterly basis and records the associated
change in fair value at each reporting period.

    Future Income Taxes

    The recording of future income tax involves the use of various
assumptions to estimate the amounts and timing of the reversals of temporary
differences between assets and liabilities recognized for accounting and tax
purposes before and after January 1, 2011.  It also involves the estimation of
the effective tax rates for future fiscal years.  The assumptions used (which
include, but are not limited to, estimated results of operations, tax pool
claims and accounting deductions) are based on management's current estimates
and will likely change in future periods based on actual results and
accordingly so will the estimates.

    CHANGES IN ACCOUNTING POLICY

    Effective January 1, 2008, Trinidad adopted the following new accounting
standards issued by the Canadian Institute of Chartered Accountants ("CICA"),
as described further in note 1 of the notes to the unaudited interim
consolidated financial statements.

    Capital Disclosures

    CICA Section 1535 establishes both qualitative and quantitative
disclosure requirements about an entity's capital and how it is managed. As a
result of adopting this section Trinidad is now required to disclose
qualitative information about its objectives, policies and processes for
managing capital, such that users of the financial statements will be able to
evaluate the Company's management of capital.

    Inventories

    CICA Section 3031 provides guidance on the measurement of inventory, by
providing several appropriate valuation techniques to be used in the
determination of the cost of inventory, based on the type of inventory held.
The adoption of this new standard had no impact on the measurement of
inventories; however, further disclosure was required, including the carrying
value of each classification of inventory, a reconciliation of the expenses
related to inventory used during the period and the disclosure of the amount
of any write-downs or reversals of previously written-down amounts, if any.

    Financial Instruments

    The CICA issued two new accounting standards with respect to financial
instruments: Section 3862 - Financial Instruments - Disclosure and Section
3863 - Financial Instruments - Presentation. Section 3862, adopted by Trinidad
in conjunction with Section 3863, emphasizes disclosures regarding the nature
and extent of the risks arising from financial instruments and how those risks
are managed. Following the requirements of Section 3855 - Financial
Instruments - Recognition and Measurement, adopted January 1, 2007; this new
section recommends additional disclosures, including qualitative analysis of
the financial instrument risks faced by Trinidad, as well as a quantitative
analysis of the effect of changes to these risks, based on market conditions,
and their potential impact on Trinidad.

    Section 3863 establishes recommendations for the presentation of
financial instruments and non-financial derivatives in the financial
statements. There was no impact of the adoption of this section as it is
substantially similar to the previously adopted Section 3861 - Financial
Instruments - Disclosure and Presentation.

    FUTURE CHANGES IN ACCOUNTING POLICIES

    The CICA issued a new accounting standard, Section 3064 - Goodwill and
Intangible Assets, which replaces Sections 3062 - Goodwill and Other
Intangible Assets and 3450 - Research and Development Costs; and amended
Section 1000 - Financial Statement Concepts. These accounting standards
updates will be effective for fiscal years beginning on or after October 1,
2008 and Trinidad plans to adopt them effective January 1, 2009. Section 3064
recommends standards for the recognition, measurement and disclosure of
goodwill and intangible assets, including research and development costs, and
Section 1000 has been amended to clarify the criteria for recognition of an
asset. Trinidad is in the process of evaluating the impact of these standards.

    DISCLOSURE CONTROLS & PROCEDURES

    Disclosure controls and procedures are designed to provide reasonable
assurance that all information required to be disclosed by Trinidad is
recorded, processed, summarized and reported to senior management, including
the CEO and CFO, in an appropriate manner to allow timely decisions regarding
required disclosure as defined under Multilateral Instrument 52-109,
Certification of Disclosures in Annual and Interim Filings.

    Trinidad has evaluated the effectiveness of the design and operation of
disclosure controls and procedures, under the supervision of the CEO and the
CFO. Internal controls over financial reporting are designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
Canadian GAAP. There have been no changes in the internal controls over
financial reporting or disclosure controls and procedures that occurred since
the year ended December 31, 2007 and no material weaknesses or significant
deficiencies have been identified that could materially affect or are
reasonably likely to affect the Company's internal controls over financial
reporting.

    Trinidad is continuing to add process improvements to the business
process controls of Mastco and a formal assessment has not been completed on
Axxis at this time and as such Trinidad and has not concluded on the design
effectiveness as at March 31, 2008. Therefore, Trinidad has relied on
mitigating controls including management review procedures to assess the
accuracy of the financial statements at the reporting date.

    OUTLOOK

    Trinidad will continue its focus on value-based services, where our
customers recognize and reward our superior performance. We will focus on
growing our services in and around the US, with the goal to further diversify
the Company's revenue streams and to add to our operating cash flows.
Trinidad's expansion plans for 2008 are focused primarily outside of the
Canadian market, and alternatives are constantly being considered in terms of
shifting Canadian resources into other jurisdictions. Overall, management
remains confident in the long-term underlying fundamentals for Canadian
natural gas drilling and Canadian-based oilfield services. We expect that high
production decline rates, combined with anticipated rising natural gas demand,
will work in tandem to encourage an increase in Canadian natural gas drilling
and activity levels for Canadian-based oilfield services. As well, we agree
with energy analysts that an increasingly integrated and competitive global
natural gas market coupled with supply and demand dynamics, will lead to
global shortages of the resource, which in turn will reshape the pricing
dynamic of natural gas within the next few years. The outlook for oil remains
positive and demand growth should continue to support longer-term demand along
with OPEC's patient, wait-and-see approach and rising political risk on a
global scale. With current oil prices exceeding $115 per bbl, we believe
Trinidad is well positioned to capitalize on drilling opportunities by
utilizing our new, high tech, deeper drilling fleet that is capable of
drilling more complex wells.

    The excess natural gas storage and resulting negative impact on natural
gas prices that persisted for most of 2007 appears to be easing. With natural
gas inventories starting the heating season at record highs, early 2008
sentiment was bearish, however, a cold winter in North America reduced natural
gas storage levels to exit the quarter near the five-year average. This
stronger than expected natural gas consumption, coupled with reduced liquefied
natural gas imports to the US, has led to strengthening economic fundamentals
with improved demand for oilfield services expected to increase by the fourth
quarter of 2008. Stronger than expected natural gas and oil prices thus far in
2008 should positively impact customer cash flows and provide incentive to
drill oil and natural gas wells. However, a sustained period of higher natural
gas prices will most likely be required to instil producer confidence to
increase overall drilling activity. We believe many of our customers had a
defined work scope for the first half of 2008 and are taking a wait-and-see
approach to the latter half of this year. Further, we believe that they will
utilize the upcoming seasonally slower spring break-up period to re-evaluate
their spending plans for the balance of 2008, and potentially adjust their
2008 budgets upwards.

    The Alberta government's announcement of the "New Royalty Framework"
created significant uncertainty in the oil and gas industry in Alberta. The
effect of the announcement immediately impacted activity levels as exploration
and production companies curtailed capital spending projects in order to
assess the financial impact that the new royalty rate structure would have on
the long-term economic viability of capital projects. During the 2008
provincial election, the Alberta government went on record stating there had
been "unintended consequences" from the "New Royalty Framework" and the issue
would be revisited. As a result, on April 10, 2008, the Alberta government
made several changes to the "New Royalty Framework" which included concessions
that provide tax breaks for deep drilling. Both the near and long-term impact
to Trinidad will be dependent on its customers' capital spending plans for
2008 and beyond, but the introduction of tax breaks for deeper drilling
positions Trinidad well given the nature of our current fleet.

    Trinidad remains focused on the US market as this segment continues to
contribute a significant portion of the Company's overall results. With the
completion of the rig construction program last year, combined with the Axxis
acquisition and the transfer of two rigs from Canada, the combined US rig
fleet now totals 48 land drilling rigs, one barge rig, three barge rigs under
Bareboat Charters and one barge rig under construction. All rigs that have
been deployed under the rig construction program are secured by long-term
take-or-pay contracts while rigs acquired from the Axxis acquisition are
secured by fixed-price contracts. This presence in the US has further enhanced
Trinidad's strategic positioning and through this geographical diversification
the Company has maintained shareholder value and has mitigated the low
industry fundamentals in the Canadian marketplace. Future cash flows are
expected to be further enhanced with the deployment of the second barge
drilling rig.

    Trinidad's Board of Directors and management team are focused on
increasing value through continuing to manage current operations, growing the
business and being the market leader. Management will continue to evolve the
face of Trinidad with the objective to ensure that the strategic goals of the
organization are met and value for shareholders is maximized. All future
capital investments will continue to be evaluated based on return on capital
with a focus on low risk operating environments.

    Trinidad Drilling Ltd. is a growth-oriented, dividend-paying oil and
natural gas services provider based in Calgary, Alberta. Focusing on deeper
drilling, modern rig fleets, in-house design and technology-based advancement,
Trinidad has positioned itself as a premium service provider. Trinidad's
growth is driven by chasing and capturing new horizons - advancing
technologies, offering new services, entering new markets and performing
strategic acquisitions. With the completion of the recent rig construction
program and the acquisition of Axxis, the Company has 110 land drilling rigs
ranging in depth capability from 1,000 - 6,500 metres, and two barge drilling
rigs, one of which is currently under construction. In addition to its
drilling rigs, Trinidad has 20 well servicing rigs that have been completely
retrofitted or were constructed within the past five years and 20 pre-setting
and coring rigs. Trinidad is focused on providing modern, reliable, expertly
designed equipment operated by well-trained and experienced personnel.
Trinidad's drilling fleet is one of the most highly capable, expertly
designed, well-equipped, adaptable and competitive in the industry."signed" Lyle C. Whitmarsh     "signed" Brent J. Conway
    --------------------------     ------------------------
    President and Chief            Chief Financial Officer
    Executive Officer


    The Toronto Stock Exchange has neither approved nor disapproved the
    information contained herein.



    CONSOLIDATED BALANCE SHEETS
                                                       March 31, December 31,
    ($ thousands - Unaudited)                              2008         2007
    -------------------------------------------------------------------------

    Assets
    Current assets
    Cash and cash equivalents                             9,920       18,021
    Accounts receivable                                 196,432      143,522
    Inventory (note 6)                                   20,938       18,231
    Prepaid expenses                                      3,784        2,879
    Future income taxes                                   5,708            -
                                                    -------------------------
                                                        236,782      182,653

    Deposit on capital assets                             3,739        3,458
    Capital assets                                    1,135,804    1,110,730
    Goodwill                                            172,129      169,134
    Other long-term assets                               29,016       31,181
                                                    -------------------------
                                                      1,577,470    1,497,156
                                                    -------------------------

    Liabilities
    Current liabilities
    Accounts payable and accrued liabilities             86,993       78,649
    Dividends payable                                     4,202            -
    Accrued trust distributions                               -        9,616
    Current portion of deferred revenue                   6,577        6,890
    Current portion of long-term debt                     1,813        1,679
    Current portion of fair value of interest
     rate swap                                            3,432        1,718
                                                    -------------------------
                                                        103,017       98,552

    Deferred revenue                                      3,241        4,038
    Long-term debt                                      420,217      402,489
    Convertible debentures, net of
     transaction costs                                  317,817      315,991
    Fair value of interest rate swaps                     5,914        4,211
    Future income taxes                                  52,250       37,373
                                                    -------------------------
                                                        902,456      862,654
    Shareholders' equity
    Shareholders' equity (note 7(a))                    678,339            -
    Unitholders' capital (note 7(b))                          -      675,728
    Exchangeable shares (note 8)                              -        2,477
    Convertible debentures                               28,223       28,223
    Contributed surplus (note 7(c))                      13,996       13,843
    Accumulated other comprehensive loss                (47,911)     (61,788)
    Retained earnings (deficit)                           2,367      (23,981)
                                                    -------------------------
                                                        675,014      634,502
                                                    -------------------------
                                                      1,577,470    1,497,156
                                                    -------------------------

    (See notes to the unaudited interim consolidated financial statements)

    Commitments (note 12)



    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

    Three months ended March 31,
    ($ thousands except share and per share
     data - Unaudited)                                     2008         2007
    -------------------------------------------------------------------------

    Revenue
    Oilfield services                                   221,017      205,933
    Bareboat Charter loss (note 12)                      (1,424)           -
    Other                                                    58          278
                                                    -------------------------
                                                        219,651      206,211
                                                    -------------------------

    Expenses
    Operating                                           121,223      113,194
    General and administrative                           11,423       10,429
    Interest on long-term debt (note 11)                  7,175        8,575
    Interest on convertible debentures (note 11)          8,654            -
    Stock-based compensation                                169          775
    Foreign exchange (gain) loss                         (4,382)       1,286
    Depreciation                                         23,992       18,258
    (Gain) loss on sale of assets                           (93)          44
    Reorganization costs                                  2,549            -
                                                    -------------------------
                                                        170,710      152,561
                                                    -------------------------

    Earnings before income taxes                         48,941       53,650

    Income taxes
      Current income tax                                    631        1,473
      Future income tax                                   9,398       10,234
                                                    -------------------------
                                                         10,029       11,707
                                                    -------------------------

    Net earnings                                         38,912       41,943

    Dividends                                            (4,202)           -
    Trust distributions                                  (8,362)     (28,737)

    Retained earnings - beginning of period             (23,981)      11,759
                                                    -------------------------
    Retained earnings - end of period                     2,367       24,965
                                                    -------------------------

    Earnings per share
      Basic                                                0.46         0.50
      Diluted                                              0.44         0.49

    Weighted average number of shares
      Basic                                          83,944,962   83,796,732
      Diluted                                       102,627,104   84,865,852

    (See notes to the unaudited interim consolidated financial statements)



    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

    Three months ended March 31,
    ($ thousands - Unaudited)                              2008         2007
    -------------------------------------------------------------------------

    Net earnings                                         38,912       41,943
    Other comprehensive income (loss)
      Change in fair value of derivatives
       designated as cash flow hedges, net of
       income tax (note 11)                              (1,585)          60
      Foreign currency translation adjustment            15,462       (2,738)
                                                    -------------------------
    Total other comprehensive income (loss)              13,877       (2,678)

                                                    -------------------------
    Comprehensive income                                 52,789       39,265
                                                    -------------------------

    (See notes to the unaudited interim consolidated financial statements)



    CONSOLIDATED STATEMENT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

    Three months ended March 31,
    ($ thousands - Unaudited)                              2008         2007
    -------------------------------------------------------------------------

    Accumulated other comprehensive loss -
     beginning of period                                (61,788)        (750)
    Adjust opening balance due to adoption of
     new accounting policies                                  -       (3,700)
    Other comprehensive income (loss) during
     the period                                          13,877       (2,678)
                                                    -------------------------
    Accumulated other comprehensive loss -
     end of period                                      (47,911)      (7,128)
                                                    -------------------------

    (See notes to the unaudited interim consolidated financial statements)



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    Three months ended March 31,
    ($ thousands - Unaudited)                              2008         2007
    -------------------------------------------------------------------------

    Cash provided by (used in)
    Operating activities
    Net earnings for the period                          38,912       41,943
    Items not affecting cash
      Depreciation                                       23,992       18,258
      (Gain) loss on sale of assets                         (93)          44
      Stock-based compensation                              169          775
      Future income tax expense                           9,398       10,234
      Effective interest on financing costs (note 11)     1,076          349
      Accretion on convertible debentures (note 11)       1,168            -
      Unrealized foreign exchange (gain) loss            (4,112)       1,207
                                                    -------------------------
                                                         70,510       72,810
    Net change in non-cash operating
     working capital                                    (22,538)     (27,297)
                                                    -------------------------
                                                         47,972       45,513
                                                    -------------------------

    Investing activities
    (Increase) decrease in deposits on capital assets      (166)      28,170
    Purchase of capital assets                          (30,175)    (133,554)
    Proceeds from dispositions                            2,741          203
    Change in non-cash working capital                  (24,645)       4,897
                                                    -------------------------
                                                        (52,245)    (100,284)
                                                    -------------------------

    Financing activities
    Increase in long-term debt, net                      15,263       86,066
    (Decrease) increase in deferred revenue              (1,425)       4,717
    Net proceeds from shares issues (note 7)                118        1,193
    Trust unit distribution                             (17,978)     (28,688)
                                                    -------------------------
                                                         (4,022)      63,288
                                                    -------------------------

    Cash flow from operating, investing and
     financing activities                                (8,295)       8,517
    Effect of translation on foreign currency cash          194       (1,123)
                                                    -------------------------
    (Decrease) increase in cash for the period           (8,101)       7,394

    Cash - beginning of period                           18,021        9,413
                                                    -------------------------
    Cash - end of period                                  9,920       16,807
                                                    -------------------------

    Interest paid                                         7,217        7,726
    Taxes paid                                               48           86

    (See notes to the unaudited interim consolidated financial statements)



    NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS


    1.  STRUCTURE OF THE CORPORATION

        Organization

        Trinidad Drilling Ltd. ("Trinidad" or the "Company") is incorporated
        under the laws of the Province of Alberta. The Company was formed by
        way of an arrangement under the Business Corporations Act of Alberta
        pursuant to an arrangement agreement dated January 9, 2008 between
        the Company and Trinidad Energy Services Income Trust (the "Trust").
        The Arrangement involved the exchange, on a one-for-one basis of
        trust units and exchangeable shares, after accounting for the
        conversion factor applicable to the exchangeable shares, for common
        shares of Trinidad. The effective date of the Arrangement was
        March 10, 2008 (note 3).

    2.  ACCOUNTING POLICIES AND ESTIMATES

        These unaudited interim consolidated financial statements are
        prepared by management, in accordance with Canadian Generally
        Accepted Accounting Principles, and follow the same accounting
        policies and methods as the audited consolidated financial statements
        for the year ended December 31, 2007, except as noted below, and
        therefore do not contain all of the disclosures required for the
        annual financial statements. As a result, the unaudited interim
        consolidated financial statements should be read in conjunction with
        the audited consolidated financial statements of the Trust contained
        in the annual report for the year ended December 31, 2007.

        Adoption of new accounting standards

        Effective January 1, 2008, Trinidad adopted the following new
        accounting standards issued by the Canadian Institute of Chartered
        Accountants ("CICA"):

        Capital Disclosures

        CICA Section 1535 establishes both qualitative and quantitative
        disclosure requirements about an entity's capital and how it is
        managed. As a result of adopting this section Trinidad is now
        required to disclose qualitative information about its objectives,
        policies and processes for managing capital, such that users of the
        financial statements will be able to evaluate the Company's
        management of capital - see note 10.

        Inventories

        CICA Section 3031 provides guidance on the measurement of inventory,
        by providing several appropriate valuation techniques to be used in
        the determination of the cost of inventory, based on the type of
        inventory held. The adoption of this new standard had no impact on
        the measurement of inventories; however, further disclosure was
        required, including the carrying value of each classification of
        inventory, a reconciliation of the expenses related to inventory used
        during the period and the disclosure of the amount of any write-downs
        or reversals of previously written-down amounts, if any - see note 6.

        Financial Instruments

        The CICA issued two new accounting standards with respect to
        financial instruments: Section 3862 - Financial Instruments -
        Disclosure and Section 3863 - Financial Instruments - Presentation.
        Section 3862, adopted by Trinidad in conjunction with Section 3863,
        emphasizes disclosures regarding the nature and extent of the risks
        arising from financial instruments and how those risks are managed.
        Following the requirements of Section 3855 - Financial Instruments -
        Recognition and Measurement, adopted January 1, 2007; this new
        section recommends additional disclosures, including qualitative
        analysis of the financial instrument risks faced by Trinidad, as well
        as a quantitative analysis of the effect of changes to these risks,
        based on market conditions, and their potential impact on Trinidad -
        see note 11.

        Determination of Fair Market Value

        The fair value of Trinidad's long-term debt was determined using
        current market price indicators and the fair-value of the
        convertible debentures was calculated at the quoted market price.

        Section 3863 establishes recommendations for the presentation of
        financial instruments and non-financial derivatives in the financial
        statements. There was no impact of the adoption of this section as it
        is substantially similar to the previously adopted Section 3861 -
        Financial Instruments - Disclosure and Presentation.

        There are no other material impacts on the unaudited interim
        consolidated financial statements for the adoption of these new
        standards.

    FUTURE CHANGES IN ACCOUNTING POLICIES

        The CICA issued a new accounting standard, Section 3064 - Goodwill
        and Intangible Assets, which replaces Sections 3062 - Goodwill and
        Other Intangible Assets and 3450 Research and Development Costs;
        and amended Section 1000 - Financial Statement Concepts. These
        accounting standards updates will be effective for fiscal years
        beginning on or after October 1, 2008 and Trinidad plans to adopt
        them effective January 1, 2009. Section 3064 recommends standards
        for the recognition, measurement and disclosure of goodwill and
        intangible assets, including research and development costs, and
        Section 1000 has been amended to clarify the criteria for
        recognition of an asset. Trinidad is in the process of evaluating
        the impact of these standards.

    3.  THE ARRANGEMENT

        On March 10, 2008, unitholders of the Trust and holders of the
        exchangeable shares (the "Securityholders") voted, and overwhelmingly
        approved, reorganizing the Trust, by way of a plan of arrangement
        under the Business Corporations Act (Alberta), into a corporation
        (the "Arrangement") pursuant to an arrangement agreement dated
        January 9, 2008 between Trinidad and the Trust. The purpose of the
        Arrangement was to convert the Trust back into a corporate structure
        that was better suited to its core business model of growth and
        capital appreciation for its Securityholders. Management and the
        Board of Directors believe that the best opportunity for creating
        value is by reinvesting a significant portion of overall cash flow
        back into the business and to focus on increasing overall per share
        earnings, cash flow, net asset value, as well as overall debt
        reduction and they believe that a corporate structure better
        positions Trinidad to pursue these initiatives. For financial
        reporting presentation purposes, these changes are being treated as
        if they occurred on January 1, 2008.

        The Arrangement resulted in: (i) unitholders receiving Trinidad
        shares in exchange for their trust units on a one-for-one basis; and
        (ii) exchangeable shareholders receiving Trinidad shares on the same
        basis as unitholders based on the number of trust units into which
        such shares were exchangeable into on the effective date of the
        Arrangement.

        Effective March 10, 2008, Trinidad established an Incentive Option
        Plan under which incentive options will be granted to officers,
        employees and consultants to provide an opportunity for these
        individuals to participate in the growth and development of the
        Company. The Incentive Option Plan was developed to replace the Unit
        Rights Incentive Plan of the Trust and, in accordance with the
        Arrangement, participants received incentive options on a one-for-one
        basis for the incentive rights held at the time of conversion.
        References to the "Incentive Options Plan" and "options" should be
        read as references to "Unit Rights Incentive Plan" and "rights",
        respectively, for periods prior to March 10, 2008.

    4.  SEASONALITY

        Trinidad operates a substantial number of rigs in Western Canada and
        therefore, operations are heavily dependent upon the seasons. The
        winter season, which incorporates the first quarter, is a busy period
        as oil and gas companies take advantage of frozen conditions to move
        drilling rigs into regions which might otherwise be inaccessible to
        heavy equipment due to swampy conditions. The second quarter normally
        encompasses a slow period referred to as spring break-up. During this
        period melting conditions result in temporary municipal road bans
        that effectively prohibit the movement of drilling rigs. The third
        and fourth quarters are usually representative of average activity
        levels.

        Trinidad's expansion to the US market has reduced its overall
        exposure to the seasonal factors that are present in its Canadian
        operations. These seasonal conditions typically limit Canadian
        drilling activity, whereas in the US operators have increased
        flexibility to work throughout the year. This increased number of
        operating days throughout the year has allowed Trinidad to better
        manage its business with more sustainable cash flows throughout the
        annual cycle.

    5.  ACQUISITION

        Acquisition of assets of Axxis

        Effective July 5, 2007, a subsidiary of Trinidad purchased
        substantially all of the assets of US-based Drilling Productivity
        Realized, L.L.C., P.C. Axxis, L.L.C., DPR International, L.L.C. and
        DPR Rentals, L.L.C. (collectively, "Axxis") for consideration of
        $148.1 million. Additionally, Trinidad acquired a commitment to
        construct an additional barge rig for approximately US$27.5 million,
        of which $5.6 million had been spent at the time of acquisition and
        was reimbursed to the former owners and included in the purchase
        price. The acquisition was funded through the issuance of
        $29.3 million of convertible debentures to the former shareholders of
        Axxis and $124.4 million in cash proceeds raised through a public
        issuance of 325,000 convertible debentures for gross proceeds of
        $325.0 million.

        The consideration paid for this acquisition has been allocated under
        the purchase method as follows:

        ($ thousands)                                                   2007
        ---------------------------------------------------------------------
        Purchase price allocated as follows:
          Capital assets                                              96,488
          Assets under construction                                    5,624
          Intangible assets                                           39,569
          Goodwill                                                    51,636
          Long-term liabilities                                      (39,569)
                                                                 ------------
                                                                     153,748
                                                                 ------------

        Financed as follows:
          Convertible debentures                                      29,337
          Cash                                                       124,411
                                                                 ------------
                                                                     153,748
                                                                 ------------

        As a result of the acquisition of Axxis, Trinidad is obligated to pay
        US$12.5 million annually to the former shareholders of Axxis for the
        next three years following the acquisition pertaining to provisions
        under the Bareboat Charters, discussed further in note 12 -
        Commitments. The consideration will be paid annually and is
        contingent on the continued operation of three barge rigs currently
        under contract. To the extent that these contracts are terminated
        prior to the end of the three years no further payments will be
        required. The amount paid under this commitment is considered a cost
        of the purchase and has been included in the purchase price and will
        be accrued and recorded against the associated revenue earned from
        the rigs and reported net as Bareboat Charter income (loss).

    6.  INVENTORY

                                                       March 31, December 31,
        ($ thousands)                                      2008         2007
        ---------------------------------------------------------------------
        Parts and materials                               8,387        8,884
        Work-in-progress                                 12,551        9,347
                                                     ------------------------
        Total inventory                                  20,938       18,231
                                                     ------------------------

        All inventory balances are carried at the lower of cost or net
        realizable value. The construction operations regularly utilizes
        inventory in the construction and recertification of rigs and rig
        related equipment. For the three months ending March 31, 2008, there
        were no material write-downs or reversal of previously written-down
        amounts.

        Throughout the period the amount of inventories recognized as an
        expense were:

        Three months ended March 31,
        ($ thousands)                                      2008         2007
        ---------------------------------------------------------------------
        Raw materials and consumables purchased          10,166       26,818
        Labour costs                                      3,317        3,126
        Other costs                                         100           64
        Net change in inventory                          (2,707)        (585)
                                                    -------------------------
        Amount of inventories expensed in period         10,876       29,423
                                                    -------------------------


    7.  SHAREHOLDERS' EQUITY AND CONTRIBUTED SURPLUS

        a) Shareholders' equity

        Authorized
        Unlimited number of common shares, voting, participating

        ($ thousands except
         share data)            March 31, 2008          December 31, 2007
        ---------------------------------------------------------------------
                             Number        Amount      Number        Amount
                            of Shares         $       of Shares         $
                          ---------------------------------------------------
        Shareholders'
         equity -
         opening balance            -            -            -            -
        Shares issued
         pursuant to the
         Arrangement       84,035,873      678,282            -            -
        Shares issued
         on exercise of
         options                4,375           51            -            -
        Contributed surplus
         transferred on
         exercised
         options                    -            6            -            -
                          ---------------------------------------------------
        Shareholders'
         equity -
         closing balance   84,040,248      678,339            -            -
                          ---------------------------------------------------


        b) Unitholders' capital

        ($ thousands except
         unit data)             March 31, 2008          December 31, 2007
        ---------------------------------------------------------------------
                             Number        Amount      Number        Amount
                            of Units          $       of Units          $
                          ---------------------------------------------------
        Unitholders'
         capital -
         opening balance   83,615,790      675,728   82,981,952      669,584
        Trust units
         issued on
         conversion of
         exchangeable
         shares               412,233        2,477      356,404        3,300
        Trust units
         issued on
         exercise of
         rights                 7,850           67      277,434        2,515
        Contributed surplus
         transferred on
         exercised rights           -           10            -          329
        Trust units
         cancelled under
         the Arrangement  (84,035,873)    (678,282)           -            -
                          ---------------------------------------------------
        Unitholders'
         capital -
         closing balance            -            -   83,615,790      675,728
                          ---------------------------------------------------


        c) Contributed surplus

                                                       March 31, December 31,
        ($ thousands)                                      2008         2007
        ---------------------------------------------------------------------
        Contributed surplus - opening balance            13,843       11,722
        Stock-based compensation expense                    169        2,450
        Contributed surplus transferred on
         exercise of options                                (16)        (329)
                                                    -------------------------
        Contributed surplus - ending balance             13,996       13,843
                                                    -------------------------


    8.  EXCHANGEABLE SHARES

        Trinidad has the following exchangeable shares outstanding:

        ($ thousands except
         share data)            March 31, 2008          December 31, 2007
        ---------------------------------------------------------------------
                             Number        Amount      Number        Amount
                            of Shares         $       of Shares         $
                          ---------------------------------------------------
        Exchangeable
         shares -
         opening balance      300,599        2,477      611,966        5,777
        Exchangeable
         shares exchanged,
         Initial Series      (253,430)      (1,977)           -            -
        Exchangeable
         shares exchanged,
         Series C             (47,169)        (500)    (311,367)      (3,300)
                          ---------------------------------------------------
        Exchangeable
         shares -
         ending balance             -            -      300,599        2,477
                          ---------------------------------------------------


        Pursuant to the Arrangement all the exchangeable shares of Trinidad
        were converted based on the exchange ratio in effect at the time of
        conversion to trust units and subsequently exchanged on a one-for-one
        basis for common shares. The initial series exchangeable shares were
        exchanged at a ratio of 1.39024 providing for 352,328 trust units
        upon conversion. Series C exchangeable shares were exchanged at a
        ratio of 1.27001 providing for 59,905 trust units upon conversion.

    9.  INCENTIVE OPTION PLAN

        Incentive Option Plan

        On May 2, 2003, the Trust established the Unit Rights Incentive Plan
        and pursuant to the Arrangement on March 10, 2008, all outstanding
        incentive rights were exchanged, on a one-for-one basis, for
        incentive options under the new Incentive Option Plan. The Incentive
        Option Plan was created to assist directors, officers, employees and
        consultants of Trinidad and its affiliates to participate in the
        growth and development of the Company. The Incentive Option Plan is
        substantially identical to the Unit Rights Incentive Plan; however,
        does not include an exercise price reduction mechanism.

        The following table sets out options that are outstanding under
        Trinidad's Incentive Option Plan:

                                March 31, 2008          December 31, 2007
        ---------------------------------------------------------------------
                                          Weighted                  Weighted
                                           Average                   Average
                            Number of     Exercise    Number of     Exercise
                              Options     Price ($)      Rights     Price ($)
                          ---------------------------------------------------
        Outstanding -
         opening balance    7,965,670        12.55    8,246,839        12.43
        Granted during
         the period                 -            -       63,486        13.44
        Exercised during
         the period           (12,225)        9.68     (277,434)        9.06
        Forfeited during
         the period           (49,825)       14.63      (67,221)       13.38
                          ---------------------------------------------------
        Outstanding -
         ending balance     7,903,620        12.54    7,965,670        12.55
                          ---------------------------------------------------

        Trinidad uses the Black-Scholes option-pricing model to determine the
        estimated fair value of the options issued subsequent to January 1,
        2003. The per share weighted average fair value of options granted
        during the period ended March 31, 2008 was nil as no options were
        granted over this period (2007 - $1.49).

    10. CAPITAL MANAGEMENT

        Trinidad's capital is comprised of debt, convertible debentures and
        shareholders' equity, less cash and cash equivalents. Management
        regularly monitors total capitalization to ensure flexibility in the
        pursuit of ongoing initiatives, while ensuring that shareholder
        returns are being maximized. The overall capitalization of the
        Company is outlined below:

                                                       March 31, December 31,
        ($ thousands)                                      2008         2007
        ---------------------------------------------------------------------
        Long-term debt(1)                               425,273      407,786
        Convertible debentures(1)                       329,449      328,281
                                                    -------------------------
        Total debt                                      754,722      736,067
        Shareholders' equity                            675,014      634,502
        Less: cash and cash equivalents                  (9,920)     (18,021)
                                                    -------------------------
        Total capitalization                          1,419,816    1,352,548
                                                    -------------------------

        (1) Balance outstanding without consideration of transaction costs.


        Management is focused on several objectives while managing the
        capital structure of the Company. Specifically:

        -   Ensuring Trinidad has the financing capacity to continue to
            execute on opportunities to increase overall market share through
            strategic acquisitions and fleet construction programs that add
            value to our shareholders;

        -   Maintaining a strong capital base to ensure that investor,
            creditor and market confidence is secured;

        -   Maintaining balance sheet strength, ensuring Trinidad's strategic
            objectives are met, while retaining an appropriate amount of
            leverage;

        -   Providing shareholder return through dividends to ensure that
            income-oriented investors are provided a cash yield; and

        -   Safeguarding the entity's ability to continue as a going concern,
            such that it continues to provide returns for shareholders and
            benefits for other stakeholders.

        Trinidad manages its capital structure based on current economic
        conditions, the risk characteristics of the underlying assets, and
        Trinidad's planned capital requirements, within guidelines approved
        by its Board of Directors. Total capitalization is maintained or
        adjusted by drawing on existing debt facilities, issuing new debt or
        equity securities when opportunities are identified and through the
        disposition of underperforming assets to reduce debt or equity when
        required. On March 10, 2008, Trinidad converted from a growth-
        oriented income trust to a growth-oriented, dividend-paying
        corporation. As a result of this conversion the capital focus of the
        Company was shifted to realign with prior objectives of aggressive
        growth in its business and increasing returns to shareholders. Prior
        to the conversion Trinidad was subject to the "Normal Growth"
        provisions enacted under Bill C-52, which effectively limited the
        growth the Company could pursue. Through the elimination of these
        provisions, under the new corporate structure, management will be
        better positioned to pursue identified growth opportunities.

        The Company's syndicated loan facility is subject to five financial
        covenants, which are reported to the bank on either a monthly or
        quarterly basis. These covenants are used by management to monitor
        capital, with increased focus on the Consolidated Leverage Ratio.
        This ratio is calculated as the consolidated debt balance divided by
        adjusted consolidated earnings for the rolling four quarters, and
        must be maintained below 2.5:1. For the rolling four quarters ending
        March 31, 2008, this ratio was 2.13:1 (December 31, 2007 - 1.85:1),
        which remains in compliance with all of the banking syndicate's
        financial covenants.

    11. FINANCIAL INSTRUMENTS

        Carrying Value and Fair Value Disclosures on Financial Instruments

        Trinidad's financial instruments include cash and cash equivalents,
        accounts receivable, accounts payable and accrued liabilities,
        interest rate swaps, long-term debt and the convertible debentures.
        The carrying amounts of these financial instruments reported on the
        Company's unaudited interim consolidated balance sheets approximates
        their fair values due to their short-term nature, with the exception
        of long-term debt and the convertible debentures. The carrying values
        of Trinidad's financial instruments are as follows:

                                            March 31, 2008
                                                                       Total
                             Held for    Loans and        Other     Carrying
        ($ thousands)         Trading  Receivables  Liabilities        Value
        ---------------------------------------------------------------------
        Cash and cash
         equivalents            9,920            -            -        9,920
        Accounts receivable         -      196,432            -      196,432
        Accounts payable and
         accrued liabilities        -            -       86,993       86,993
        Interest rate swaps         -            -        9,346        9,346
        Long-term debt              -            -      393,161      393,161
        Convertible
         debentures                 -            -      346,040      346,040
        ---------------------------------------------------------------------


                                           December 31, 2007
                                                                       Total
                             Held for    Loans and        Other     Carrying
        ($ thousands)         Trading  Receivables  Liabilities        Value
        ---------------------------------------------------------------------
        Cash and cash
         equivalents           18,021            -            -       18,021
        Accounts receivable         -      143,522            -      143,522
        Accounts payable and
         accrued liabilities        -            -       78,649       78,649
        Interest rate swaps         -            -        5,929        5,929
        Long-term debt              -            -      373,204      373,204
        Convertible
         debentures                 -            -      344,214      344,214
        ---------------------------------------------------------------------


        The fair values and carrying values of Trinidad's financial
        instruments are as follows:

                               March 31, 2008           December 31, 2007

                                          Carrying                  Carrying
        ($ thousands)      Fair Value        Value   Fair Value        Value
        --------------------------------------------------------------------
        Interest rate swaps     9,346        9,346        5,929        5,929
        Credit facilities(1)
          Canadian Revolving
           Credit Facility    166,497      164,000      148,744      148,000
          Canadian Term
           Facility           103,792       98,083       99,831       98,334
          US Term Facility    133,178      125,853      123,703      121,847
        Convertible
         debentures(1)        354,337      357,672      337,506      356,504
        Other debt              8,961        8,468        8,773        8,641
                          ---------------------------------------------------
                              776,111      763,422      724,486      739,255
                          ---------------------------------------------------

    (1) The convertible debentures and credit facilities are recorded at
        their gross amounts and do not include transaction costs incurred on
        their issuance and the convertible debentures carrying value
        includes both the debt and equity components.


        Trinidad has estimated the fair value amounts using appropriate
        valuation methodologies and information available to management as of
        the valuation dates. The following methods and assumptions were used
        to estimate the fair value of each class of financial instrument for
        which it was practicable to estimate that value:

        -   Cash and cash equivalents, accounts receivable and accounts
            payable and accrued liabilities - The carrying amounts
            approximate fair value because of the short maturity of these
            instruments.

        -   Interest rate swaps - The fair value of the interest rate swaps
            is based on the quoted market prices at the date of valuation.

        -   Long-term debt - The fair value of the various pieces of long-
            term debt are based on values quoted from third-party financial
            institutions using current market price indicators.

        -   Convertible debentures - The fair value is based on the
            closing market price on the date of valuation.


        Interest rate swap

        Trinidad entered into two cash flow hedges using interest rate swap
        arrangements to hedge the floating rate interest on fifty percent of
        the outstanding balance of the US and Canadian term debt facilities.
        These contracts have been recorded at their fair value on the
        Company's unaudited interim consolidated financial statements. During
        the first quarter of 2008, Trinidad recorded a loss of $1.6 million
        (2007 - $0.06 million gain) in Other Comprehensive Income ("OCI"),
        net of taxes of $1.6 million (2007 - nil), due to the change in fair
        value of the cash flow hedge. Trinidad has assessed 100% hedge
        effectiveness; hence the entire change in fair value has been
        recorded in OCI.

        Financing costs

        The carrying value of the long-term debt and convertible debentures
        was recorded net of debt issuance costs. Under the effective interest
        rate method Trinidad recorded interest expense of $0.4 million and
        $0.7 million relating to the cost under the debt facility and the
        convertible debentures, respectively, for the three months ended
        March 31, 2008 (2007 - $0.3 million and nil, respectively) using the
        effective interest method.

        Nature and Extent of Risks Arising from Financial Instruments

        Trinidad is exposed to a number of market risks arising through the
        use of financial instruments in the ordinary course of business.
        Specifically, Trinidad is subject to credit risk, currency risk,
        interest rate risk and liquidity risk.

        Credit Risk

        Trinidad is exposed to credit risk as a result of extending credit to
        customers prior to receiving payment for services to be performed,
        creating exposure on accounts receivable balances with trade
        customers. This exposure to credit risk is managed through a
        corporate credit policy whereby upfront evaluations are performed on
        all customers and credit is granted based on payment history,
        financial conditions and anticipated industry conditions. In the
        instance that a customer does not meet initial credit evaluations
        work may be performed subject to a prepayment of services. Customer
        payments are continuously monitored to ensure the creditworthiness of
        all customers with outstanding balances and when collectability
        becomes questionable a provision for doubtful accounts has been
        established. The following is a reconciliation of the change in the
        reserve balance:

                                                   Three months
                                                          ended   Year ended
                                                       March 31, December 31,
        ($ thousands)                                      2008         2007
        ---------------------------------------------------------------------
        Opening reserve balance                           4,364        5,132
        Increase in reserve recorded in
         the income statement in the current period           -        3,929
        Working capital adjustments relating
         to acquisitions                                      -       (4,455)
        Write-offs charged against the reserve             (342)        (149)
        Recoveries of amounts previously written-off       (844)         (93)
                                                    -------------------------
        Reserve allowance at period end                   3,178        4,364
                                                    -------------------------

        As at March 31, 2008, Trinidad had accounts receivable of
        $8.2 million that were greater than 90 days for which no provision
        had been established, as the Company believes that these amounts will
        be collected.

        Currency Risk

        Trinidad's operations are affected by fluctuations in currency
        exchange rates due to the Company's expansion into the US marketplace
        and reliance on US suppliers to deliver components used by its
        manufacturing subsidiaries. Over the last two years, the Canadian
        dollar has experienced significant volatility, ranging from an
        exchange low of $0.84 US/Canadian to an exchange high of $1.09
        US/Canadian. The exposure to realized foreign currency fluctuations
        from its US subsidiaries is mitigated due to the independence of the
        US operations from its Canadian parent company for cash flow
        requirements to satisfy daily operations, creating a natural hedge.
        However, upon consolidation, Trinidad is exposed to unrealized
        fluctuations in the gains and losses on consolidation and US-
        denominated intercompany balances in the Canadian entities. As at
        March 31, 2008, the Company did not have any foreign currency hedges
        in place and does not intend to enter into any new currency hedges.
        The Company may, however, hedge foreign currency rates in the future,
        depending on the business environment and growth opportunities.

        As at March 31, 2008, portions of Trinidad's cash and cash
        equivalents, accounts receivable, accounts payable and accrued
        liabilities were denominated in US dollars. In addition, Trinidad's
        US subsidiary is subject to translation gains and losses upon
        consolidation. Based on these US dollar financial instrument closing
        balances, net income and OCI for the three months ended March 31,
        2008, would have fluctuated by approximately $0.1 million and
        $3.3 million, respectively, for every $0.01 variation in the value of
        the US/Canadian exchange rate.

        Interest Rate Risk

        Trinidad is subject to risk exposure related to changes in interest
        rates on borrowings under the credit facilities which are subject to
        floating interest rates. In order to hedge this overall risk exposure
        Trinidad entered into interest rate swaps on fifty percent of the
        outstanding borrowings under the US and Canadian term credit
        facilities, rendering them partially fixed. As at March 31, 2008,
        Trinidad had $387.9 million outstanding under the credit facilities.
        A change of one percent in the interest rates would cause a
        $0.7 million change in the interest expense for the three months
        ended March 31, 2008.

        Liquidity Risk

        Liquidity risk is the risk that Trinidad will not be able to meet
        its financial obligations as they become due. The Company actively
        manages its liquidity through daily, weekly and longer-term cash
        outlook and debt management strategies. Trinidad's policy is to
        ensure that sufficient resources are available either from cash
        balances, cash flows or undrawn committed bank facilities, to ensure
        all obligations are met as they fall due. To achieve this objective,
        the Company:

        -   Maintains cash balances and liquid investments with highly-rated
            counterparties;

        -   Limits the maturity of cash balances; and

        -   Borrows the bulk of its debt needs under committed bank lines or
            other term financing.

        The following maturity analysis shows the remaining contractual
        maturities for Trinidad's financial liabilities:

        As at March 31, 2008
                              2008     2009     2010    2011   2012     There
                                                                        after
                       ------------------------------------------------------
        Accounts
         payable and
         accrued
         liabilities     86,993         -         -         -        -      -
        Interest rate
         swaps            2,522     3,409     2,541       874        -      -
        Canadian
         revolving
         debt(1)              -   164,000         -         -        -      -
        Canadian term
         debt               750     1,000     1,000    95,333        -      -
        US term debt        962     1,283     1,283   122,432        -      -
        Other debt          552       484       492     6,940        -      -
        Convertible
         debentures (2)       -         -         -         -        -      -
        Interest payments
         on contractual
         obligations     38,707    44,845    42,020    31,067   13,731      -
                       ------------------------------------------------------
        Total           130,486   215,021    47,336   255,779   13,731      -
                       ------------------------------------------------------

    (1) This revolving debt facility is renewable annually subject to the
        mutual consent of the lenders.  To the extent that it is not renewed
        the drawn-down balance would become due 364 days later.  Trinidad
        anticipates this debt facility to be renewed into the future.
    (2) Trinidad expects to convert the convertible debentures into shares
        and therefore no commitment has been recorded.


    12. COMMITMENTS

        Rig Construction Program

        In conjunction with the acquisition of the assets of Axxis, Trinidad
        assumed the remaining construction commitments of a barge rig, of
        which $5.6 million had been spent as at the date of the acquisition
        and was reimbursed to the former owners of Axxis. Total costs of
        construction are expected to be US$27.5 million of which
        US$19.2 million had been spent as of March 31, 2008. The barge rig is
        expected to be deployed in the second quarter of 2008.

        Bareboat Charters

        As a part of the Axxis acquisition, Trinidad entered into an
        Assignment Agreement in which the contracts to operate three barge
        rigs (the "Bareboat Charters" or "Charter") were transferred to
        Trinidad. Under the Bareboat Charters, Trinidad is committed to
        operate the rigs on behalf of a third party. In turn, as the owners
        of the rigs, this third party is entitled to receive 25% of the net
        operating revenues (gross revenue minus $1,200 per day general and
        administrative cost) and 50% of the net margin earned under each
        charter. Under the original agreement any earnings in excess of this
        payment were to be retained as compensation for the operation of the
        barge rigs; however, as part of the purchase agreement Trinidad
        committed to pay the former owners of Axxis US$12.5 million per year
        for the next three consecutive years, of which one-third of the
        payment, or US$4.2 million, shall be attributable to each of the
        three Bareboat Charters.

        This payment is contingent on the continued operation of the rigs and
        to the extent that the contract is terminated by the rigs' owner, no
        further payments will be required. This fixed payment was structured
        to represent the residual earnings in excess of the payment to the
        third party; hence Trinidad is exposed to minimal risk and rewards of
        the arrangement. In the instance that dayrates or expenses fluctuate
        from the original provisions in the Bareboat Charters, Trinidad is
        exposed to the residual gain or loss; however, it was determined the
        impact would not be significant. Trinidad has disclosed all
        transactions pertaining to the Bareboat Charters on a net basis.
        Trinidad does not bear the significant risks and rewards of the
        arrangement nor does it absorb the associated credit risk or asset
        risk.

    13. SEGMENTED INFORMATION

        Since Trinidad announced its intention to expand operations into the
        US marketplace in 2005, its operations have been diversified from its
        primary geographical focus in Western Canada to include various
        locations in the United States, such that a significant proportion of
        Trinidad's operations now occur in the US marketplace. The
        acquisitions of Cheyenne Drilling and Axxis, as well as Trinidad's
        rig construction program, provided additional rigs of varying depths
        and capabilities for the US operations, which complemented the
        drilling fleet operating in the Canadian market and expanded
        Trinidad's overall drilling operations. Despite the similarities in
        the assets acquired, the increased management depth in the United
        States and the varying conditions between the Canadian and United
        States market have resulted in management evaluating Trinidad's
        drilling performance on a geographically segmented basis. In
        addition, the acquisition of Mastco in 2006 further broadened the
        operations of Trinidad to include the capability to design,
        manufacture, sell and refurbish drilling rigs and related equipment.
        The unique characteristics of this subsidiary, which are different
        from Trinidad's core drilling operations, have resulted in
        management's separate evaluation of its results. Transactions between
        the segments are recorded at cost and have been eliminated upon
        consolidation.

        Three months
         ended                       United                 Inter-
         March 31,      Canadian     States   Construc-   segment
         2008           Drilling   Drilling       tion      Elimi-
        ($ thousands) Operations Operations Operations    nations      Total
        ---------------------------------------------------------------------
        Revenue          132,104     84,313     11,591     (8,357)   219,651
        Operating
         expense          72,262     46,442     10,876     (8,357)   121,223
                        -----------------------------------------------------
        Gross margin      59,842     37,871        715          -     98,428

        Interest on
         long-term debt    4,690      2,518        (33)         -      7,175
        Interest on
         convertible
         debentures        8,654          -          -          -      8,654
        Depreciation      10,819     13,005        168          -     23,992
        Loss (gain)
         on assets            15        163       (271)         -        (93)
                        -----------------------------------------------------
        Income before
         corporate
         items            35,664     22,185        851          -     58,700
        General and
         administrative                                               11,423
        Stock-based
         compensation                                                    169
        Foreign
         exchange gain                                                (4,382)
        Reorganization
         costs                                                         2,549
        Income taxes                                                  10,029
                        -----------------------------------------------------
        Net earnings                                                  38,912
                        -----------------------------------------------------

        Capital
         expenditures
         (including
         acquisitions,
         transfers
         and deposits)    (4,189)    34,512         18          -     30,341
        Total assets     715,548    831,806     30,116          -  1,577,470
        Goodwill          38,154     87,355     46,620          -    172,129
                        -----------------------------------------------------


        Three months
         ended                       United                 Inter-
         March 31,      Canadian     States   Construc-   segment
         2007           Drilling   Drilling       tion      Elimi-
        ($ thousands) Operations Operations Operations    nations      Total
        ---------------------------------------------------------------------
        Revenue          135,085     62,840     30,608    (22,322)   206,211
        Operating
         expense          71,932     34,161     29,423    (22,322)   113,194
                        -----------------------------------------------------
        Gross margin      63,153     28,679      1,185          -     93,017

        Interest on
         long-term debt    5,294      3,254         27          -      8,575
        Interest on
         convertible
         debentures            -          -          -          -          -
        Depreciation       9,432      8,675        151          -     18,258
        Loss on assets        14         30          -          -         44
                        -----------------------------------------------------
        Income before
         corporate
         items            48,413     16,720      1,007          -     66,140
        General and
         administrative                                               10,429
        Stock-based
         compensation                                                    775
        Foreign
         exchange gain                                                 1,286
        Reorganization
         costs                                                             -
        Income taxes                                                  11,707
                        -----------------------------------------------------
        Net earnings                                                  41,943
                        -----------------------------------------------------

        Capital
         expenditures
         (including
         acquisitions,
         transfers
         and deposits)    30,598     75,470       (684)         -    105,384
        Total assets     748,146    600,934     14,260          -  1,363,340
        Goodwill          38,154     42,098     42,837          -    123,089
                        -----------------------------------------------------


    14. COMPARATIVE FIGURES

        Certain of the comparative figures have been reclassified to conform
        to current year's presentation. Such reclassification did not impact
        previously reported net earnings or retained earnings.
For further information:
For further information: Lyle Whitmarsh, President & Chief Executive
Officer or Brent Conway, Chief Financial Officer or Lisa Ciulka, Director of
Investor Relations at: Phone: (403) 265-6525, Fax: (403) 265-4168, E-mail:
lciulka@trinidaddrilling.com