News Releases

Trinidad Drilling Ltd. reports first quarter 2015 results; Strong contract position moderates the effect of weak industry conditions

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TSX SYMBOL: TDG

CALGARY, May 6, 2015 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or the "Company") reported first quarter 2015 results. Weakening commodity prices led to lower activity levels and operating income⁽¹⁾ in the first quarter. Trinidad's drilling contracts provided some protection against these conditions, with lump sum cash payments received in the quarter and more stable activity levels and dayrates on the remaining 45% of the Company's fleet, still covered by these style of contracts.

"The impact of lower commodity prices was felt strongly in the first quarter of 2015 as customers pulled back on drilling programs across North America," said Lyle Whitmarsh, Trinidad's Chief Executive Officer. "We reacted to the changing industry conditions quickly by reducing headcount, lowering our cost structure and cutting back our capital expenditure budget for 2015. These changes, along with our high quality fleet, our strong contract base, and our ample liquidity, position Trinidad well to withstand the current downturn. We expect that the market will remain challenged until production levels begin to lower and commodity prices improve."

(1)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.

FINANCIAL HIGHLIGHTS

Three months ended March 31,
($ thousands except share and per share data)		2015	2014	% Change
Revenue		194,396	251,505	(22.7)
Revenue, net of third party costs		186,079	231,018	(19.5)
Operating income ⁽¹⁾		72,282	95,192	(24.1)
Operating income percentage ⁽¹⁾		37.2%	37.8%	(1.6)
Operating income - net percentage ⁽¹⁾		38.5%	41.1%	(6.3)
EBITDA ⁽¹⁾		51,524	81,255	(36.6)
	Per share (diluted) ⁽²⁾	0.39	0.58	(32.8)
Adjusted EBITDA ⁽¹⁾		60,031	79,441	(24.4)
	Per share (diluted) ⁽²⁾	0.45	0.57	(21.1)
Cash provided by operations		928	19,433	(95.2)
	Per share (basic / diluted) ⁽²⁾	0.01	0.14	(92.9)
Funds provided by operations ⁽¹⁾		36,092	60,857	(40.7)
	Per share (basic / diluted) ⁽²⁾	0.27	0.44	(38.6)
Net earnings		12,130	25,762	(52.9)
	Per share (basic / diluted) ⁽²⁾	0.09	0.19	(52.6)
Adjusted net earnings ⁽¹⁾		18,025	27,746	(35.0)
	Per share (basic / diluted) ⁽²⁾	0.13	0.20	(35.0)
Capital expenditures		50,134	31,206	60.7
Dividends declared		6,671	6,908	(3.4)
Shares outstanding - diluted
	(weighted average) ⁽²⁾	133,694,825	138,899,380	(3.7)

As at		March 31,	December 31,
($ thousands except percentage data)		2015	2014	% Change
Total assets		2,077,770	1,941,621	7.0
Total long-term liabilities		740,872	628,047	18.0

(1)	Readers are cautioned that Operating income, Operating income percentage, Operating income - net percentage, EBITDA, Adjusted EBITDA, Funds provided by operations, Adjusted net earnings and the related per share information do not have standardized meanings prescribed by IFRS - see Non-GAAP Measures Definitions and Additional GAAP Measures Definitions at the end of this document.
(2)	Basic shares include the weighted average number of shares outstanding over the period. Diluted shares include the weighted average number of shares outstanding over the period and the dilutive impact, if any, of the number of shares issuable pursuant to the Incentive Option Plan.

OPERATING HIGHLIGHTS


Three months ended March 31,		2015	2014	% Change
Land Drilling Market
Operating days ⁽¹⁾
	Canada	2,343	4,077	(42.5)
	United States and International	2,695	4,311	(37.5)
Rate per operating day ⁽¹⁾
	Canada (CDN$)	25,764	25,415	1.4
	United States and International (CDN$)	33,194	24,630	34.8
	United States and International (US$)	27,778	22,641	22.7
Utilization rate - operating day ⁽¹⁾
	Canada	50%	74%	(32.4)
	United States and International	61%	76%	(19.7)
Number of drilling rigs at period end ⁽³⁾
	Canada	54	61	(11.5)
	United States and International	47	61	(23.0)
Barge Drilling Market
	Operating days ⁽¹⁾	57	244	(76.6)
	Rate per operating day (CDN$) ⁽¹⁾	29,993	37,815	(20.7)
	Rate per operating day (US$) ⁽¹⁾	26,051	34,767	(25.1)
	Utilization rate - operating day ⁽¹⁾	13%	54%	(76.0)
	Number of barge drilling rigs at period end	2	2	-
	Number of barge drilling rigs under Bareboat
	Charter Agreements at period end	3	3	-
Joint Venture Operations ⁽²⁾
	Operating days⁽¹⁾	410
	Rate per operating day (CDN$)⁽¹⁾	61,412
	Rate per operating day (US$) ⁽¹⁾	50,825
	Utilization rate - operating day ⁽¹⁾	94%
	Number of drilling rigs at period end	8	3	166.7

(1)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.
(2)	Trinidad is party to a joint venture with a wholly-owned subsidiary of Halliburton. These rigs are owned by the joint venture. Operating data prior to the first quarter of 2015 has not been provided given the start-up nature of the operations.
(3)	Refer to the Results from Operations section for details on the changes to the rig count.

OVERVIEW

Trinidad's first quarter 2015 results reflected the weakening industry conditions present in North America in the first three months of the year. As commodity prices continued to fall during the quarter, oil and gas producers pulled back on capital spending, leading to lower drilling activity and increased competition. Trinidad's contract base added strength to the Company's operations, as contracts terminated early provided lump sum cash flow and remaining contracts provided ongoing activity and dayrate stability. In addition, Trinidad's international joint venture operations continued to grow with an increasing contribution to adjusted EBITDA and net earnings in the quarter.

Adjusted EBITDA was $60.0 million in the first quarter of 2015, down 24.4% from the same quarter last year, as a result of lower activity driven by reduced customer demand and weakening commodity prices. The impact of lower activity was partly offset by higher early termination and standby revenue in the current period in the US operations.

Net earnings in the first quarter of 2015 was $12.1 million, down 52.9% from the same period in 2014. Net earnings lowered in the current period as a result of lower adjusted EBITDA discussed above and a lower gain on sale of property and equipment, partly offset by lower share-based payment expenses, lower depreciation and amortization, and lower income taxes.

In the first quarter of 2015, commodity prices continued to decline. Crude oil inventory levels remained high in North America, despite significantly lower levels of drilling activity, resulting in an ongoing slide in oil prices during the quarter. Crude oil prices averaged US$48.49 per barrel, down 50.9% from the first quarter of 2014 and 33.8% lower than the fourth quarter of 2014. Natural gas prices were also weaker in the current period, averaging US$2.87 per mmBtu, down 44.3% from the first quarter of 2014, and 34.2% lower than the fourth quarter of 2014. The strengthening US dollar against the Canadian dollar reduced the full impact of the weakening commodity prices on Canadian oil and gas producers; however, market conditions continued to soften in the first quarter of 2015.

In the three months of 2015, Canadian industry activity levels averaged 35%, down from 58% in the same period last year. While Trinidad's activity levels lowered from the same time last year, the Company maintained its premium over industry activity and its Canadian utilization rate - drilling days averaged 46% in the current quarter.

In the US, industry activity also decreased in the first quarter of 2015, averaging 1,403 active rigs, down from 1,705 active rigs in the same period last year. Excluding rigs earning early termination or standby revenue in the quarter, Trinidad's US and international division averaged approximately 30 active rigs in the first quarter of 2015, down from approximately 48 active rigs in the first quarter of 2014.

During the first three months of 2015, the US dollar was stronger against the Canadian dollar than during the same period last year. Trinidad has a significant portion of its business that operates in US dollars and the change in foreign exchange rates in the quarter had a noticeable, and largely positive impact on the Company's results. The stronger US dollar positively impacted EBITDA generated by Trinidad's US and international division, but also drove increased depreciation expense in that division and increased the value of Trinidad's US dollar based senior note in the first quarter of 2015.

INDUSTRY STATISTICS

	2015	Full Year	2014				Full Year	2013
	Q1	2014	Q4	Q3	Q2	Q1	2013	Q4	Q3	Q2
Commodity Prices
Aeco natural gas price (CDN$ per gigajoule)	2.60	4.28	3.44	3.82	4.45	5.34	3.01	3.33	2.32	3.36
Henry Hub natural gas price (US$ per mmBtu)	2.87	4.36	3.76	3.94	4.59	5.15	3.72	3.84	3.55	4.01
Western Canada Select crude oil price
(CDN$ per barrel)	43.52	82.00	65.42	85.68	91.34	85.81	75.84	69.62	86.31	79.25
WTI crude oil price (US$ per barrel)	48.49	93.06	73.21	97.60	103.06	98.72	98.01	97.56	105.82	94.14
Canadian / US dollar exchange rate	1.24	1.10	1.14	1.09	1.09	1.10	1.03	1.05	1.04	1.02

US Activity
Average industry active land rig count ⁽¹⁾	1,403	1,789	1,843	1,828	1,781	1,705	1,685	1,679	1,687	1,686
Average Trinidad active land rig count ⁽²⁾	30	50	52	53	47	48	50	49	51	50

Canadian Activity
Average industry utilization ⁽³⁾	35%	44%	45%	46%	28%	58%	40%	43%	37%	18%
Average Trinidad utilization ⁽⁴⁾	46%	52%	57%	61%	24%	68%	48%	48%	50%	24%

(1)	Baker Hughes rig counts (information obtained from Tudor, Pickering, Holt & Co. weekly rig roundup report).
(2)	Includes US and international rigs.
(3)	Canadian Association of Oilwell Drilling Contractors (CAODC) utilization.
(4)	Based on drilling days (spud to rig release dates).

FIRST QUARTER 2015 HIGHLIGHTS

Adjusted EBITDA in the first quarter was $60.0 million, down 24.4% from the same quarter last year. The decrease from the same period last year was largely the result of lower activity in the Canadian and US operations, driven by weakening commodity prices. The impact of lower activity was partly offset by higher early termination and standby revenue received in the US and international operations in the first quarter of 2015, compared to the prior year. Excluding early termination and standby revenue for contract periods after March 31, 2015 (out-of-period early termination and standby revenue), adjusted EBITDA for the first quarter of 2015 was $53.6 million, compared to $76.4 million for the first quarter of 2014. The early termination and standby revenue received compensates for lost margin from contracts that have been cancelled prior to their completion date. The joint venture contributed $4.3 million in adjusted EBITDA in the current period, compared to $(0.1) million in the first quarter of 2014.
Operating income - net percentage was 38.5% in the first quarter of 2015, down from 41.1% in the first quarter of 2014. Operating income - net percentage decreased as a result of lower adjusted EBITDA in the quarter. In addition, higher manufacturing revenue in the current quarter negatively impacted operating income - net percentage. The manufacturing division typically generates lower margins than Trinidad's drilling operations as the external new builds are constructed for Trinidad's joint venture company and joint venture partner at cost plus a small margin. Excluding out-of-period early termination and standby revenue for both quarters, operating income - net percentage was 36.7% for the first quarter of 2015, down 3.8% from the first quarter of 2014.
Net earnings were $12.1 million for the first quarter of 2015 compared to $25.8 million in the first quarter of 2014. The decrease in net earnings from the first quarter last year was largely driven by reduced operating income in the Canadian and US operations resulting from the softening market. The decrease was partly offset by lower general and administrative, depreciation and income tax expenses.
In response to the lower commodity prices, the Company has lowered its cost structure through a roll back in wages, reduced headcount and lower supply and input costs. In addition, a lower capital budget for 2015 conserves cash flow while still adding strategic new builds under contract into the joint venture and Trinidad's North American fleet.
The Company's Manufacturing division delivered a high specification rig to both the Canadian and US operations, and completed work on the remaining two rigs for the joint venture operations in Mexico, as well as the training rig for the Company's joint venture partner.

RESULTS FROM OPERATIONS

*Canadian Operations*

Three months ended March 31,
($ thousands except percentage and operating data)	2015	2014	% Change
Operating revenue ⁽¹⁾	60,370	103,607	(41.7)
Other revenue	45	722	(93.8)
	60,415	104,329	(42.1)
Operating costs ⁽¹⁾	34,822	54,300	(35.9)
Operating income ⁽³⁾	25,593	50,029	(48.8)
Operating income - net percentage ⁽³⁾	42.4%	48.0%

Operating days ⁽³⁾	2,343	4,077	(42.5)
Drilling days ⁽³⁾	2,135	3,713	(42.5)
Rate per operating day (CDN$) ⁽³⁾	25,764	25,415	1.4
Utilization rate - operating day ⁽³⁾	50%	74%	(32.4)
Utilization rate - drilling day ⁽³⁾	46%	68%	(32.4)
CAODC industry average ⁽²⁾	35%	58%	(39.7)

Number of drilling rigs at period end	54	61	(11.5)

(1)	Operating revenue and operating costs for the three months ended March 31, 2015 and 2014 exclude third party recovery and third party costs of $6.6 million and $14.5 million, respectively.
(2)	CAODC industry average is based on drilling days divided by total days available.
(3)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.

Weakening oil prices carried over from the fourth quarter of 2014, resulted in a strong pull back in spending by oil and gas producers. A cautious outlook for producers drove a shortened winter drilling season. Activity levels failed to reach the highs generally recorded early in the year and began to lower earlier than usual in the quarter, resulting in lower activity and reduced operating income in Trinidad's Canadian division in the first quarter of 2015, compared to the same quarter last year.

Operating revenue in the quarter was $60.4 million, down 41.7% from the same quarter of 2014. Utilization and operating days in the current quarter were in line with the reduction in revenue; however, dayrates remained relatively unchanged from the same quarter last year. The impact of an increased concentration of higher specification rigs offset the downward pressure on dayrates experienced in the quarter.

Operating income - net percentage decreased during the quarter to 42.4%, compared to 48.0% in the same quarter last year. The reduction in profitability in the current quarter was driven by lower activity levels and pressure from reduced customer demand. With lower activity levels, the relatively fixed nature of operating support costs were spread over fewer operating days leading to some margin compression in the quarter. Rig labour costs were higher than the prior year as a result of industry wage increases introduced in the latter portion of 2014. During the quarter, Trinidad worked with its suppliers to reduce costs in all aspects of its operations. While these negotiations are ongoing, the Company expects to show lower costs throughout the remainder of 2015.

In the quarter, Trinidad's rig count decreased by seven rigs compared to the first quarter of 2014. During the prior year, Trinidad decommissioned 13 rigs that were no longer competitive, transferred five rigs from the Company's US and international division to Canada, and added one new high specification rig.

First quarter of 2015 versus fourth quarter of 2014

Operating revenue and operating income decreased by $26.7 million and $14.2 million, respectively, in the first quarter of 2015, compared to the fourth quarter of 2014. While typically the first quarter is the most active quarter in the Canadian drilling industry, capital budgets for exploration and production companies have been significantly curtailed in 2015 as companies assess the impact of the recent commodity price decline. This cutback in spending had a direct impact on Trinidad's activity in the first quarter. The competitive industry pressures and lower activity levels resulted in a drop in operating margin - net percentage in the first quarter of 2015 to 42.4% from 45.7% in the fourth quarter of 2014. Trinidad's high performance fleet combined with cost control programs implemented by the Company partly offset the downward pressures on dayrates.

*United States and International Operations*

Three months ended March 31,
($ thousands except percentage and operating data)		2015	2014	% Change
Operating revenue ⁽¹⁾		91,189	114,781	(20.6)
Other revenue		275	46	497.8
		91,464	114,827	(20.3)
Operating costs ⁽¹⁾		48,006	70,972	(32.4)
Operating income ⁽¹⁾		43,458	43,855	(0.9)
Operating income - net percentage ⁽²⁾		47.5%	38.2%

Land Drilling Rigs
Operating days ⁽²⁾		2,695	4,311	(37.5)
Drilling days ⁽²⁾		2,266	3,727	(39.2)
Rate per operating day (CDN$) ⁽²⁾		33,194	24,630	34.8
Rate per operating day (US$) ⁽²⁾		27,778	22,641	22.7
Utilization rate - operating day ⁽²⁾		61%	76%	(19.7)
Utilization rate - drilling day ⁽²⁾		51%	66%	(22.7)
Number of drilling rigs at period end		47	61	(23.0)

Barge Drilling Rigs
Operating days ⁽²⁾		57	244	(76.6)
Rate per operating day (CDN$) ⁽²⁾		29,993	37,815	(20.7)
Rate per operating day (US$) ⁽²⁾		26,051	34,767	(25.1)
Utilization rate - operating day ⁽²⁾		13%	54%	(76.0)
Number of barge drilling rigs at period end		2	2	-
Number of barge drilling rigs under
	Bareboat Charter Agreements at period end	3	3	-

(1)	Operating revenue and operating costs for the three months ended March 31, 2015 and 2014 exclude third party recovery and third party costs of $1.2 million and $5.7 million, respectively.
(2)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.

In the first quarter of 2015, Trinidad's US and international division faced similar pressures from softening market conditions in North America. Oil and gas producers reduced capital spending in response to lower commodity prices, which resulted in lower activity across the Company's US land drilling and barge drilling operations.

Operating days and utilization decreased by 37.5% and 19.7% in the first quarter of 2015, respectively, compared to the previous year as a result of slower demand and a number of rigs that received early termination and standby revenue with no associated operating days. Lower activity, combined with fewer available rigs, resulted in 20.6% lower operating revenue in the first quarter of 2015 compared to the same period in 2014.

Trinidad's drilling contracts assisted in mitigating the effects of weakened industry conditions in the first quarter of 2015, as a number of customers chose to terminate contracts early due to reduced capital spending plans. Revenue for the three months ended March 31, 2015 included US$16.1 million of early termination and standby revenue for 10 rigs (of which US$5.3 million related to contracted periods after March 31, 2015) compared to US$7.4 million in the first quarter of the prior year (of which US$2.8 million related to contracted periods after March 31, 2014). The early termination and standby charges reflect the margins that would have been earned over the contract period for the respective rigs. Excluding the out-of-period early termination and standby revenue, operating revenue for the first quarter of 2015 was $83.8 million, $19.4 million lower than in the same quarter in 2014. In addition, operating revenue was negatively impacted in 2015 by lower activity in the barge operations which were idle for a significant portion of the first quarter of 2015. These negative impacts on revenue were partly offset by the favorable impact of foreign exchange.

Dayrates in the first quarter of 2015 for the US land drilling operations were US$5,137 per day higher than in the first quarter of 2014 as a result of the higher early termination and standby revenue and a change in rig mix which led to a higher proportion of contracted and high specification rigs operating in the current quarter. Excluding all early termination and standby revenue in each quarter, dayrates were US$21,802 per day in the first quarter of 2015, compared to US$20,925 per day in the same quarter of the prior year, reflecting the higher specification rigs operating.

Operating income in the first quarter of 2015 was in line with the same period in 2014 while operating income - net percentage for the quarter was 9.3% higher than 2014. With reduced activity in the current quarter, as discussed above, both revenue and operating costs declined. Higher early termination and standby revenue combined with a stronger US dollar versus Canadian dollar had a positive impact on operating income and operating income - net percentage for the first quarter of 2015 compared to the prior year. Excluding the impact of the out-of-period early termination and standby revenue for both quarters, operating income would have been $37.0 million, $3.8 million lower in the first quarter of 2015 versus 2014, while operating income - net percentage would have been 43.7%, 7.2% higher compared to the prior year.

At March 31, 2015, Trinidad's US and international rig count totaled 47 rigs, 14 fewer rigs than at the same time last year but consistent with December 31, 2014. The reduction in rig count reflects the decommissioning of nine rigs in 2014 along with the redeployment of two US rigs and three Mexican rigs to the Company's Canadian drilling operations. No rigs were removed or added to rig count during the first quarter of 2015.

The barge drilling operations reflected the continuing softening of the barge market during the first quarter of 2015. Dayrates and operating days were lower compared to the prior year with utilization at 13% in the current quarter. As dayrates continued to lower and competition remained high for available drilling work, Trinidad chose to stack its five barge rigs during the first quarter of 2015. The Company has scaled back staffing levels and costs to reflect the current market and Trinidad does not intend to extend the Bareboat Charter Agreements that expired at the end of the first quarter.

First quarter of 2015 versus fourth quarter of 2014

Compared to the fourth quarter of 2014, revenue and operating income decreased by $37.3 million and $7.8 million, respectively, in the first quarter of 2015. Activity levels continued to decline as commodity prices dropped further and market conditions continued to weaken in the first quarter of 2015. Operating days for the land drilling operations were 2,125 days lower and utilization was 36% lower in the first quarter of 2015 compared to the fourth quarter of 2014. These negative impacts were partly offset by a higher amount of early termination and standby revenue in the first quarter of 2015. The Company recorded US$5.6 million of early termination and standby revenue in the fourth quarter of 2014 compared to US$16.1 million in the first quarter of 2015. Excluding all early termination and standby revenue in each quarter, dayrates in the first quarter of 2015 were US$480 per day higher than the fourth quarter of 2014.

As expected, the barge drilling operations negatively impacted the results of the first quarter of 2015 compared to the fourth quarter of 2014. Trinidad's barge drilling rigs had 155 fewer operating days and dayrates were US$6,744 per day lower in the first quarter of 2015 compared to the fourth quarter of 2014.

Joint Venture Operations

Amounts are presented at 100% of the value included in the statement of operations and comprehensive income for Trinidad Drilling International (TDI); Trinidad owns 60% of the shares of TDI.

Three months ended March 31,

($ thousands except percentage and operating data)

2015

2014 ⁽²⁾

% Change

Operating revenue

26,032

3,316

685.0

Other revenue

(19)

26,013

3,316

684.5

Operating costs

15,469

2,074

645.9

Operating income ⁽¹⁾

10,544

1,242

749.0

Operating income - net percentage ⁽¹⁾

40.5%

37.5%

Operating days⁽¹⁾

410

Rate per operating day (CDN$)⁽¹⁾

61,412

Rate per operating day (US$) ⁽¹⁾

50,825

Utilization rate - operating day ⁽¹⁾

94%

Number of drilling rigs at period end

166.7

Number of active drilling rigs at period end

100.0

(1)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.
(2)	Operating data prior to the first quarter of 2015 has not been provided given the start-up nature of the operations.

During the three months ended March 31, 2015, TDI took ownership of the remaining two rigs for its Mexican operations, bringing the total rig count in the joint venture to eight. During the first quarter of 2015, TDI had all four rigs in Saudi Arabia and one rig in Mexico drilling, with the other three Mexican rigs mobilizing or waiting on location.

Operating income and operating income - net percentage in the first quarter of 2015 totaled $10.5 million and 40.5%, respectively, reflecting the drilling and mobilization activities for Mexico and drilling activities for Saudi Arabia. Operating income increased significantly from the same quarter last year, as a result of higher operating days, combined with additional mobilization and standby revenue.

In the current period, dayrates were positively impacted by three Mexician rigs receiving mobilization and standby revenue, with no associated operating days.

For the three months ended March 31, 2015, the adjusted EBITDA from investment in joint venture was $4.3 million, which was $4.4 million higher than the first quarter of 2014, driven by a higher rig count.

*Manufacturing Operations*

Three months ended March 31,
($ thousands except percentage)	2015	2014	% Change
Operating revenue ⁽¹⁾	34,196	11,854	188.5
Other revenue	4	8	(50.0)
	34,200	11,862	188.3
Operating costs ⁽¹⁾	31,536	10,836	191.0
Operating income ⁽²⁾	2,664	1,026	159.6
Operating income - net percentage ⁽²⁾	7.8%	8.6%

(1)	For the three months ended March 31, 2015, excluded from operating revenue and operating costs are downstream elimination entries of $49.1 million and $46.7 million, respectively (2014 - $7.6 million and $6.9 million, respectively). These entries remove Trinidad's percentage of profits related to manufacturing of rigs for the joint venture.
(2)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.

The purpose of the manufacturing operations is to support rig builds, rig maintenance and re-certifications for all of Trinidad's divisions, including all associates and joint ventures. Management does not commit to building a rig with the intention to earn significant profits on the rig build, and instead evaluates projects based on capital allocation and returns for the Company as a whole. All contracts are based on a cost-plus formula which is calculated in order for Trinidad to break even on rig builds when all costs, including general and administrative expenses, are factored in. Contracts are negotiated depending on the Company's varying involvement, which can range from full scale design and manufacturing to project management with a large degree of outsourcing.

For the three months ended March 31, 2015, Trinidad recognized revenue and expenses related to the rigs it was building for the Mexico joint venture operations and for the training rig it was building for Halliburton. Operating revenue increased in the current quarter by $22.3 million or 188.3%, compared to the same quarter last year as minimal external new build revenue or expenses were recognized in the first quarter of 2014.

In 2015, Trinidad is constructing three new rig builds under long-term, take-or-pay contracts for its US operations. The rigs will be high performance Candrill, 1,500 horsepower, AC rigs with walking systems and 7,500 PSI circulating systems. One of the rigs was completed at the end of the first quarter of 2015, with work continuing on the remaining two. The Company expects to complete the work on these rigs over the next six months as agreed to with our customers who have maintained the long-term, take-or-pay contracts for these rigs.

FINANCIAL HIGHLIGHTS - QUARTERLY ANALYSIS

		2015	2014				2013
($ millions except per share data and operating data)		Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
Revenue		194.4	276.4	244.5	168.9	251.5	224.6	208.7	165.4
Operating income ⁽¹⁾		72.3	93.9	80.5	45.6	95.2	99.6	76.2	55.7
Operating income percentage ⁽¹⁾		37.2%	34.0%	32.9%	27.0%	37.8%	44.4%	36.5%	33.6%
Operating income - net percentage ⁽¹⁾		38.5%	35.6%	34.7%	28.3%	41.1%	47.0%	38.5%	35.6%
Net earnings (loss)		12.1	(13.5)	19.2	(24.8)	25.9	28.8	9.2	0.3
Adjustments for:
	Depreciation and amortization	23.6	34.0	33.4	27.3	30.3	29.5	30.1	27.6
	Foreign exchange	6.2	(0.1)	0.5	1.5	3.1	0.9	0.4	-
	(Gain) loss on sale of property and equipment	(1.1)	3.5	0.1	(1.3)	(10.5)	0.1	(0.1)	1.3
	Impairment of property and equipment	-	56.9	-	20.6	-	-	-	0.1
	(Gain) loss from investment in Joint Venture	(1.2)	(1.3)	1.6	(0.4)	0.1	0.8	-	-
	Finance costs	11.4	9.8	9.7	10.0	10.0	12.0	10.4	10.0
	Income taxes	4.4	(8.9)	4.9	(7.2)	15.3	11.1	5.9	(1.6)
	Interest Income	-	-	(0.1)	(0.1)	(0.2)	(0.1)	-	-
	Other expense	2.9	0.6	(4.0)	5.3	5.5	1.5	5.9	2.2
	Income taxes paid	(1.6)	(0.3)	(0.7)	(0.7)	(0.5)	(1.8)	-	(0.8)
	Income taxes recovered	0.2	0.4	1.3	0.2	0.3	1.5	0.4	0.7
	Interest paid	(20.8)	(1.4)	(19.5)	(0.5)	(18.7)	(1.1)	(18.4)	(0.7)
	Interest received	-	-	0.1	0.1	0.2	0.1	-	-
Funds provided by operations ⁽¹⁾		36.1	79.7	46.5	30.0	60.8	83.3	43.8	39.1
Net earnings (loss) per share (diluted)		0.09	(0.10)	0.14	(0.18)	0.19	0.23	0.08	-
Funds provided by operations per share (diluted) ⁽¹⁾		0.27	0.58	0.34	0.22	0.44	0.67	0.36	0.32
(1) See the Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.


NON-GAAP MEASURES HIGHLIGHTS - QUARTERLY ANALYSIS

		2015	2014				2013
($ millions except per share data)		Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
EBITDA ⁽¹⁾		51.5	21.3	67.2	5.4	81.3	81.2	55.6	36.3
	Per share (diluted) ⁽²⁾	0.39	0.15	0.48	0.04	0.58	0.65	0.46	0.30
Adjusted EBITDA ⁽¹⁾		60.0	77.3	64.6	30.6	79.4	83.8	61.8	39.9
	Per share (diluted) ⁽²⁾	0.45	0.56	0.47	0.22	0.57	0.68	0.51	0.33
Adjusted net (loss) earnings ⁽¹⁾		18.0	23.6	14.6	(5.6)	27.7	31.2	15.4	2.6
	Per share (diluted) ⁽²⁾	0.13	0.17	0.11	(0.04)	0.20	0.25	0.13	0.02

(1)	See the Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details.
(2)	Diluted shares include the weighted average number of shares outstanding over the period and the dilutive impact, if any, of the number of shares issuable pursuant to the Incentive Option Plan.


OPERATING HIGHLIGHTS - QUARTERLY ANALYSIS

		2015	2014				2013
		Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
Land Drilling Market
Operating days ⁽¹⁾
	Canada	2,343	3,271	3,424	1,431	4,077	2,935	3,018	1,434
	United States and International	2,695	4,820	4,906	4,441	4,311	4,470	4,733	4,578
Rate per operating day ⁽¹⁾
	Canada (CDN$)	25,764	26,624	24,669	26,338	25,415	25,102	23,686	25,511
	United States and International (CDN$)	33,194	25,150	22,842	22,890	24,630	27,243	23,297	22,908
	United States and International (US$)	27,778	22,476	21,092	20,819	22,641	26,213	22,460	22,436
Utilization rate - operating day ⁽¹⁾
	Canada	50%	62%	66%	26%	74%	52%	54%	26%
	United States and International	61%	97%	96%	80%	76%	71%	76%	73%
Number of drilling rigs at period end ⁽³⁾
	Canada	54	53	61	59	61	61	61	60
	United States and International	47	47	54	56	61	64	68	68
	Coring and surface casing rigs	-	-	-	-	-	-	-	15
Barge Drilling Market
	Operating days ⁽¹⁾	57	212	334	259	244	394	449	445
	Rate per operating day (CDN$) ⁽¹⁾	29,993	36,616	37,967	37,953	37,815	34,810	33,962	31,731
	Rate per operating day (US$) ⁽¹⁾	26,051	32,795	35,072	34,599	34,767	33,490	32,740	31,077
	Utilization rate - operating day ⁽¹⁾	13%	46%	73%	57%	54%	86%	97%	98%
	Number of barge drilling rigs at period end	2	2	2	2	2	2	2	2
	Number of barge drilling rigs under
	Bareboat Charter Agreements at period end	3	3	3	3	3	3	3	3
Joint Venture Operations ⁽²⁾
	Operating days ⁽¹⁾	410
	Rate per operating day (CDN$) ⁽¹⁾	61,412
	Rate per operating day (US$) ⁽¹⁾	50,825
	Utilization rate - operating day ⁽¹⁾	94%
	Number of drilling rigs at period end	8	6	4	4	3	-	-	-

(1)	See Non-GAAP Measures Definitions and Additional GAAP Measures Definitions section at the end of this document for further details
(2)	Trinidad is party to a joint venture with a wholly-owned subsidiary of Halliburton. The rigs are owned by the joint venture. Operating data prior to the first quarter of 2015 has not been provided given the start-up nature of the operations.
(3)	Refer to the Results from Operations section for details on changes to the rig count.

GENERAL AND ADMINISTRATIVE

Three months ended March 31,

($ thousands except percentage)

2015

2014

% Change

General and administrative ⁽¹⁾

15,976

15,334

4.2

% of revenue

8.2%

6.1%

Share-based payment expense

427

5,575

(92.3)

Third party recoverable costs

567

282

101.1

Total general and administrative

16,970

21,191

(19.9)

% of revenue

8.7%

8.4%

(1)	General and administrative expenses excluding share-based payment expense and third party recoverable costs. This number is discussed as "Other G&A" per the below analysis.

For the three months ended March 31, 2015, total general and administrative (G&A) expenses decreased by $4.2 million or 19.9%, compared to 2014, and remained consistent as a percent of revenue.

For the three months ended March 31, 2015, other G&A expenses increased by $0.6 million when compared to the prior year as a result of higher salaries and wages and rent expense which were partly offset by lower legal fees and office expenses. The salaries and wages in the first quarter of 2015 included severance costs which impacted the current period, but are expected to lead to longer term savings for the Company.

In light of current market conditions, Trinidad implemented several measures in the first quarter of 2015 to lower its G&A expenses. These measures included a headcount reduction, a 10% reduction in salaries and board fees for all executives and directors, and a company-wide average wage rollback of 7% for salaried employees. Severance costs of approximately $1.8 million were included in the first quarter of 2015. Excluding these one-time severance costs, other G&A expenses as a percent of revenue would have been 7.3%.

Share-based payment expense decreased by $5.1 million in the first quarter compared to the same period last year. A lower share price in 2015 was the main driver in the reduction in share-based payment expense in the quarter, partly offset by an increase in the number of Deferred Share Units and Performance Share Units outstanding during the current year. Annual grants for both Performance Share Units and Deferred Share Units generally occur in the first quarter of the current fiscal year.

Third party recoverable costs relate to costs incurred by Trinidad on behalf of the joint venture. As these costs are fully recoverable, Trinidad records a related revenue entry for this same amount, causing no net income effect.

FINANCIAL SUMMARY

As at	March 31,	December 31,
($ thousands)	2015	2014	$ Change
Working capital⁽¹⁾	194,139	166,502	27,637

Senior Notes	567,605	519,759	47,846
Credit facility	64,948	15,000	49,948
	632,553	534,759	97,794
Less: unamortized debt issue costs	(6,757)	(6,951)	194
Total long-term debt	625,796	527,808	97,988
Total long-term debt as a percentage of assets	30.1%	27.2%


Total assets	2,077,770	1,941,621	136,149
Total long-term liabilities	740,872	628,047	112,825
Total long-term liabilities as a percentage of assets	35.7%	32.3%

Three months ended March 31,	2015	2014	$ Change
Cash provided by operations	928	19,433	(18,505)
Cash used by investing	(42,453)	(8,103)	(34,350)
Cash provided (used) by financing	34,653	(6,583)	41,236

(1)	See Non-GAAP Measures Definitions section at the end of this document for further details.

For the three months ended March 31, 2015, working capital increased by $27.6 million when compared to December 31, 2014, due to a decrease in current liabilities of $38.4 million offset by a decrease in current assets of $10.8 million.

Current assets decreased during the quarter as costs included in inventory and prepaid expenses at December 31, 2014, relating to manufacturing of external rig builds were transferred to expense as Trinidad's manufacturing division completed work on the remaining builds. There was a related increase in accounts receivable to reflect the revenue for the work completed on the external rig builds.

Current liabilities decreased in the current period mainly related to a decrease in accounts payable related to lower activity at the quarter end for the land drilling operations in Canada and the US, combined with lower activity on external rig builds. Deferred revenue was reduced as the manufacturing division moved to complete its external rig builds and recognized revenue for amounts collected in advance.

Trinidad's total long-term debt balance increased by $98.0 million compared to December 31, 2014. This increase was largely due to an increase in the Senior Notes at March 31, 2015, as a result of the increase in the US to Canadian dollar exchange rate at quarter end, as these notes are held in US funds. The Senior Notes are translated at each period end, as such their value will fluctuate with exchange rates. The Senior Notes are due January 15, 2019 and interest is payable semi-annually in arrears on January 15 and July 15. An additional $49.9 million was drawn on Trinidad's Canadian dollar revolving credit facility during the three months ended March 31, 2015, for a total of $64.9 million drawn at quarter end.

The Company has available capacity of $135.1 million on its $200 Canadian revolving facility and all of the $200 million US revolving facility is available.

The Canadian and US revolving facilities require quarterly interest payments that are based on Bankers Acceptance and LIBOR rates and incorporate a tiered interest rate, which varies depending on the results of the Consolidated Total Debt to EBITDA ratio.

Capital Expenditures

Three months ended March 31,

($ thousands)

2015

2014

New builds

24,608

15,351

Capital upgrades and enhancements

7,936

10,800

Maintenance and infrastructure

4,213

5,055

Capital spares inventory

13,377

Total

50,134

31,206

During the three months ended March 31, 2015, a total of $50.1 million was spent on capital expenditures, compared to $31.2 million in the prior year. These capital expenditures were substantially related to the Company's rig build program for its US operations as well as work completing upgrades on existing equipment and capital inventory related to cancelled new builds and upgrades.

In addition to the amounts above, Trinidad spent $23.7 million related to its portion of capital spending for the joint venture. As of March 31, 2015, the joint venture had taken ownership of the remaining two rigs for its Mexican operations.

In 2015, Trinidad expects to spend a total of approximately $175.0 million on capital projects. This total includes the completion of three US new builds for Trinidad's fleet and two Mexican new builds for the joint venture, certain items purchased for new builds and upgrades that have been cancelled will be put into capital inventory for use in Trinidad's existing fleet.


2015 Capital Budget
($ thousands)											2015
Growth capital (Trinidad owned equipment)											90,000
Capital inventory											35,000
Maintenance and infrastructure capital											10,000
											135,000
Joint venture capital (Trinidad's 60% share)											40,000
Total 2015 capital budget											175,000

Trinidad expects cash provided by operations and the Company's various sources of financing to be sufficient to meet its debt repayments, future obligations and to fund planned capital expenditures.

Current financial performance is within the financial ratio covenants under the revolving credit facility as reflected in the table below under IFRS:


RATIO	March 31,	December 31,	THRESHOLD
	2015	2014

Consolidated Senior Debt to Consolidated Bank EBITDA ⁽¹⁾	0.03:1	(0.18):1	3.00:1 maximum
Consolidated Total Debt to Consolidated Bank EBITDA ⁽¹⁾	2.56:1	1.93:1	4.00:1 maximum
Consolidated Bank EBITDA to Consolidated Cash Interest Expense ⁽¹⁾	5.41:1	6.20:1	2.75:1 minimum

(1)

Please see the Non-GAAP Measures Definitions section at the end of this document for further details.

At March 31, 2015, Total Debt to Bank EBITDA was 2.56 times, compared to 1.93 times at December 31, 2014. Total Debt to Bank EBITDA increased due to lower adjusted EBITDA in the current quarter compared to the first quarter of 2014 and a higher debt balance at March 31, 2015, resulting from a stronger US dollar translation and draws on the credit facility. Note that Consolidated Bank EBITDA does not include EBITDA from investment in joint venture. Dividends paid to Trinidad from the joint venture would be eligible for inclusion in Consolidated Bank EBITDA in the period that payment occurs. At March 31, 2015, the cumulative adjusted EBITDA from investment in joint venture was $5.3 million, of which no amounts have been paid back by the joint venture. The joint venture had $10.0 million of cash on its statement of financial position at March 31, 2015. Given the start-up nature of the operations, no payments of cumulative adjusted EBITDA from investment in joint venture have been made. If the unpaid cumulative adjusted EBITDA from joint venture was included at March 31, 2015, the Total Debt to Bank EBITDA would be 2.48:1.

Readers are cautioned that the ratios noted above do not have standardized meanings as calculated under IFRS.

OUTLOOK

The initial strong declines in drilling activity witnessed in the first few months of 2015 appear to have slowed to date in the second quarter of 2015. Crude oil prices have also levelled off above US$50 per barrel recently, giving the oil and gas industry a more stable environment to assess future plans.

In Canada, it is currently spring break up and activity levels are low as is typical at this time. Customers are showing interest in returning to work; however, activity is expected to be lower than the previous year and competition for work remains strong, leading to ongoing pressure on dayrates. Trinidad anticipates that activity in the second quarter will be weak as customers delay drilling programs to later in the year.

In the US, activity has stabilized at around 25 to 30 active rigs, approximately 50 to 60% of the Company's US fleet. To date in 2015, Trinidad has received early termination revenue on several rigs and has taken advantage of opportunities to put some rigs back to work as customers high grade their fleets. Trinidad expects that activity and dayrates in the US will remain under pressure until commodity prices improve.

Internationally, Trinidad's joint venture with Halliburton is running as expected. Opportunities to add additional rigs to the joint venture are currently being evaluated. These opportunities could provide the Company with a way to move idle North American rigs to a new location, improving overall activity levels and profitability.

Of the rigs Trinidad currently has running, the vast majority are operating under long-term, take-or-pay contracts, providing the Company with a higher level of revenue stability and clarity. Trinidad currently has approximately 45% of its total fleet under long-term contracts with an average term remaining of 1.5 years.

At the end of the first quarter, Trinidad had $64.9 million drawn on its credit facility, with $135.1 million remaining available on its Canadian credit facility and US$200 million available on its US credit facility. In addition, Trinidad had $69.3 million in cash on hand at the end of the first quarter of 2015. Under current conditions, Trinidad does not foresee any liquidity issues over the remainder of 2015.

Trinidad believes that lower drilling activity in North America will eventually lead to lower production and reduced crude oil supplies. The timing of this occurrence and the associated increase in crude oil prices is the subject of much debate. Trinidad has positioned itself well to manage through these weaker times, while also preparing to perform strongly when higher demand returns.

The Company has lowered its cost structure through a roll back in wages, reduced headcount and lower supply costs. In addition, a lower capital budget for 2015 conserves cash flow while still adding strategic new builds under contract into the joint venture and Trinidad's North American fleet.

Over the longer term, Trinidad believes that the future for the drilling industry lies in modern, high performance equipment. The Company has built a reputation designing, building and operating this style of equipment and is well equipped to compete strongly once better industry conditions return.

CONFERENCE CALL
A conference call and webcast to discuss the results will be held for the investment community on Thursday, May 7th, 2015 beginning at 9:00 a.m. MT (11:00 a.m. ET). To participate, please dial 888-231-8191 (toll-free in North America) or 647- 427-7450 approximately 10 minutes prior to the conference call. An archived recording of the call will be available from approximately 12:30 p.m. MT on May 7th, 2015 until midnight May 14th, 2015 by dialing 855-859-2056 or 416-849-0833 and entering replay access code 21256705. A live audio webcast of the conference call will also be available via the Investor Relations page of Trinidad's website.

TRINIDAD DRILLING LTD.

Trinidad is a corporation focused on sustainable growth that trades on the Toronto Stock Exchange under the symbol TDG. Trinidad's divisions operate in the drilling and barge-drilling sectors of the North American oil and natural gas industry with operations in Canada and the United States. In addition, through a joint venture, Trinidad has the opportunity to operate drilling rigs in other international markets such as Saudi Arabia and Mexico. 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 adaptable, technologically advanced and competitive in the industry

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at	March 31,	December 31,
($ thousands) - unaudited	2015	2014

Assets
Current Assets
Cash and cash equivalents	69,269	71,062
Accounts receivable	248,472	223,750
Inventory	9,541	29,618
Prepaid expenses	6,164	19,755
	333,446	344,185

Property and equipment	1,422,250	1,325,730
Intangible assets and goodwill	108,503	99,678
Deferred income taxes	24,274	8,070
Investment in joint venture	189,297	163,958
	2,077,770	1,941,621

Liabilities
Current Liabilities
Accounts payable and accrued liabilities	131,104	156,003
Dividends payable	6,671	6,758
Deferred revenue and customer deposits	1,532	14,922
	139,307	177,683

Long-term debt	625,796	527,808
Deferred income taxes	115,076	100,239
	880,179	805,730

Shareholders' Equity
Common shares	1,079,411	1,093,426
Contributed surplus	64,683	59,005
Accumulated other comprehensive income	127,048	62,470
Deficit	(73,551)	(79,010)
	1,197,591	1,135,891
	2,077,770	1,941,621

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three months ended March 31,

($ thousands) - unaudited

2015

2014

Revenue

Oilfield service revenue

193,503

250,447

Other revenue

893

1,058

194,396

251,505

Expenses

Operating expense

122,114

156,313

General and administrative

16,970

21,191

Depreciation and amortization

23,612

30,255

Foreign exchange

6,159

3,154

Gain on sale of property and equipment

(1,100)

(10,539)

167,755

200,374

(Gain) loss from investment in joint venture

(1,271)

131

Finance costs

11,426

9,959

Earnings before income taxes

16,486

41,041

Income taxes

Current

2,646

290

Deferred

1,710

14,989

4,356

15,279

Net earnings

12,130

25,762

Other comprehensive income

Foreign currency translation adjustment,

net of income tax

64,578

24,843

64,578

24,843

Total comprehensive income

76,708

50,605

Earnings per share

Net earnings

Basic / Diluted

0.09

0.19

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three months ended March 31, 2015 and 2014			Accumulated
			other
	Common	Contributed	comprehensive		Total
($ thousands) - unaudited	shares	surplus	income ⁽¹⁾	(Deficit)	equity
Balance at December 31, 2014	1,093,426	59,005	62,470	(79,010)	1,135,891
Exercise of stock options	-	-	-	-	-
Shares repurchased through normal course issuer bid	(14,015)	5,665	-	-	(8,350)
Share-based payment expense	-	13	-	-	13
Total comprehensive income	-	-	64,578	12,130	76,708
Dividends	-	-	-	(6,671)	(6,671)
Balance at March 31, 2015	1,079,411	64,683	127,048	(73,551)	1,197,591

Balance at December 31, 2013	1,117,197	50,607	4,404	(58,120)	1,114,088
Exercise of stock options	440	(117)	-	-	323
Share-based payment expense	-	174	-	-	174
Total comprehensive income	-	-	24,843	25,762	50,605
Dividends	-	-	-	(6,908)	(6,908)
Balance at March 31, 2014	1,117,637	50,664	29,247	(39,266)	1,158,282

⁽¹⁾	Accumulated other comprehensive income consists of the foreign currency translation adjustment.
	All amounts will be reclassified to profit or loss when specific conditions are met.


CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31,
($ thousands) - unaudited		2015	2014

Cash provided by (used in)
Operating activities
Net earnings		12,130	25,762
Adjustments for:
	Depreciation and amortization	23,612	30,255
	Foreign exchange	6,159	3,154
	Gain on sale of property and equipment	(1,100)	(10,539)
	(Gain) loss from investment in joint venture	(1,271)	131
	Finance costs	11,426	9,959
	Income taxes	4,356	15,279
	Interest income	(18)	(180)
	Other ⁽¹⁾	2,884	5,575
	Income taxes paid	(1,638)	(400)
	Income taxes recovered	210	310
	Interest paid	(20,676)	(18,629)
	Interest received	18	180
Funds provided by operations		36,092	60,857
Change in non-cash operating working capital		(35,164)	(41,424)
Cash provided by operations		928	19,433

Investing activities
Purchase of property and equipment		(50,134)	(31,206)
Proceeds from disposition of property and equipment		1,584	88,397
Investment in joint venture		(9,194)	(73,856)
Change in non-cash working capital		15,291	8,562
Cash used by investing		(42,453)	(8,103)

Financing activities
Proceeds from long-term debt		49,948	-
Repurchase of shares		(8,350)	-
Proceeds from exercise of options		-	323
Dividends paid		(6,758)	(6,906)
Finance costs		(187)	-
Cash (used) provided by financing		34,653	(6,583)

Cash flow from operating, investing and financing activities		(6,872)	4,747
Effect of translation of foreign currency cash		5,079	5,162
(Decrease) increase in cash for the period		(1,793)	9,909

Cash and cash equivalents - beginning of period		71,062	268,160
Cash and cash equivalents - end of period		69,269	278,069

⁽¹⁾	Other includes share-based payment expense and elimination of downstream transactions in the Manufacturing Operations net earnings.

SEGMENTED INFORMATION

The following presents the result of Trinidad's operating segments:


Three months ended		United States /
March 31, 2015	Canadian	International	Manufacturing	Joint Venture	Inter-segment
($ thousands)	Operations	Operations	Operations	Operations ⁽¹⁾	Eliminations	Corporate	Total

Operating revenue	60,370	91,189	83,252	-	-	-	234,811
Other revenue	45	337	4	-	-	-	386
Third party recovery	6,551	1,199	-	-	-	-	7,750
General and administrative - third party recovery	-	-	-	-	-	567	567
Inter-segment revenue	-	-	41,402	-	(41,402)	-	-
Elimination of downstream transactions	-	(62)	(49,056)	-	-	-	(49,118)
	66,966	92,663	75,602	-	(41,402)	567	194,396
Operating costs	34,822	48,006	78,198	-	-	-	161,026
Third party costs	6,551	1,199	-	-	-	-	7,750
Inter-segment operating	-	-	41,402	-	(41,402)	-	-
Elimination of downstream transactions	-	-	(46,662)	-	-	-	(46,662)
Operating income	25,593	43,458	2,664	-	-	567	72,282
Depreciation and amortization	9,131	13,894	587	-	-	-	23,612
Loss (gain) on sale of assets	42	(1,142)	-	-	-	-	(1,100)
Elimination of downstream transactions	-	-	-	-	-	-	-
Impairment of capital assets	-	-	-	-	-	-	-
	9,173	12,752	587	-	-	-	22,512
Segmented income	16,420	30,706	2,077	-	-	567	49,770
Gain from investment in joint venture	-	-	-	(1,271)	-	-	(1,271)
General and administrative	-	-	-	-	-	16,403	16,403
General and administrative - third party costs	-	-	-	-	-	567	567
Foreign exchange	-	-	-	-	-	6,159	6,159
Finance costs	-	-	-	-	-	11,426	11,426
Income taxes	-	-	-	-	-	4,356	4,356
Net earnings (loss)	16,420	30,706	2,077	1,271	-	(38,344)	12,130

Purchase of property and equipment	14,723	35,247	164	-	-	-	50,134

(1)	The gain from investment in joint venture reflects the Company's share of the financial performance of TDI during the period. The Company's share of individual assets and liabilities are recognized as an investment on the consolidated statements of financial position.


Three months ended		United States /
March 31, 2014	Canadian	International	Manufacturing	Joint Venture	Inter-segment
($ thousands)	Operations	Operations	Operations	Operations ⁽¹⁾	Eliminations	Corporate	Total

Operating revenue	103,607	114,781	19,478	-	-	-	237,866
Other revenue	722	46	8	-	-	-	776
Third party recovery	14,522	5,683	-	-	-	-	20,205
General and administrative - third party recovery	-	-	-	-	-	282	282
Inter-segment revenue	-	-	9,913	-	(9,913)	-	-
Elimination of downstream transactions	-	-	(7,624)	-	-	-	(7,624)
	118,851	120,510	21,775	-	(9,913)	282	251,505
Operating costs	54,300	70,972	17,766	-	-	-	143,038
Third party costs	14,522	5,683	-	-	-	-	20,205
Inter-segment operating	-	-	9,913	-	(9,913)	-	-
Elimination of downstream transactions	-	-	(6,930)	-	-	-	(6,930)
Operating income	50,029	43,855	1,026	-	-	282	95,192
Depreciation and amortization	11,860	17,980	415	-	-	-	30,255
Loss (gain) on sale of assets	(261)	(25,656)	-	-	-	-	(25,917)
Elimination of downstream transactions	-	15,378	-	-	-	-	15,378
Impairment of capital assets	-	-	-	-	-	-	-
	11,599	7,702	415	-	-	-	19,716
Segmented income	38,430	36,153	611	-	-	282	75,476
Loss from investment in joint venture	-	-	-	131	-	-	131
General and administrative	-	-	-	-	-	20,909	20,909
General and administrative - third party costs	-	-	-	-	-	282	282
Foreign exchange	-	-	-	-	-	3,154	3,154
Finance costs	-	-	-	-	-	9,959	9,959
Income taxes	-	-	-	-	-	15,279	15,279
Net earnings (loss)	38,430	36,153	611	(131)	-	(49,301)	25,762

Purchase of property and equipment	13,037	18,105	64	-	-	-	31,206

(1)	The loss from investment in joint venture reflects the Company's share of the financial performance of TDI during the period. The Company's share of individual assets and liabilities are recognized as an investment on the consolidated statements of financial position.

ADVISORY

NON-GAAP MEASURES DEFINITIONS

This document contains references to certain financial measures and associated per share data that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. These financial measures are computed on a consistent basis for each reporting period and include EBITDA, EBITDA from investment in joint venture, Adjusted EBITDA, Adjusted net (loss) earnings, working capital, Senior Debt to Bank EBITDA, Total Debt to Bank EBITDA, Bank EBITDA to Cash Interest Expense, drilling days, operating days, utilization rate - drilling day, utilization rate - operating day, and rate per operating day or dayrate. These non-GAAP measures are identified and defined as follows:

"EBITDA" is a measure of the Company's operating profitability. EBITDA provides an indication of the results generated by the Company's principal business activities prior to how these activities are financed, assets are depreciated and amortized or how the results are taxed in various jurisdictions.

EBITDA is derived from the consolidated statements of operations and comprehensive income and is calculated as follows:


Three months ended March 31,
($ thousands)		2015	2014
Net earnings		12,130	25,762
Plus:
	Finance costs	11,426	9,959
	Depreciation and amortization	23,612	30,255
	Income taxes	4,356	15,279
EBITDA		51,524	81,255

"EBITDA from investment in joint venture" provides an indication of the results generated by the Company's joint venture operations prior to how these activities are financed, assets are depreciated and amortized or how the results are taxed in various jurisdictions.

EBITDA from investment in joint venture is derived from the consolidated statements of operations and comprehensive income of Trinidad Drilling International (TDI) and is calculated as follows:


Three months ended March 31,
($ thousands)		2015	2014
Gain (loss) from investment in joint venture		1,271	(131)
Plus:
	Finance costs	99	-
	Depreciation and amortization	2,416	-
	Income taxes	306	-
EBITDA from investment in joint venture		4,092	(131)

"Adjusted EBITDA" is used by management and investors to analyze EBITDA (as defined above) prior to the effect of foreign exchange, share-based payment expense, impairment expenses and the sale of assets. Adjusted EBITDA also takes into account the Company's portion of the principal activities of the joint venture arrangement by removing the (gain) loss from investment in joint venture and including Adjusted EBITDA from investment in joint venture. Adjusted EBITDA is not intended to represent net earnings (loss) as calculated in accordance with IFRS. Adjusted EBITDA provides an indication of the results generated by the Company's principal business activities prior to how these activities are financed, assets are depreciated, amortized and impaired, the impact of foreign exchange, how the results are taxed in various jurisdictions and effects of share-based payment expense.

Adjusted EBITDA is calculated as follows:


Three months ended March 31,
($ thousands)		2015	2014
EBITDA		51,524	81,255
Plus:
	Gain on sale of property and equipment	(1,100)	(10,539)
	Share-based payment expense	427	5,575
	Foreign exchange	6,159	3,154
	(Gain) loss from investment in joint venture	(1,271)	131
Plus:
	Adjusted EBITDA from investment in joint venture	4,292	(135)
Adjusted EBITDA		60,031	79,441

"Adjusted EBITDA from investment in joint venture" is used by management and investors to analyze EBITDA (as defined above) prior to the effect of foreign exchange, share-based payment expense, impairment expense and the sale of assets. Adjusted EBITDA from investment in joint venture is not intended to represent net (loss) earnings as calculated in accordance with IFRS. Adjusted EBITDA from investment in joint venture provides an indication of the results generated by TDI's principal business activities prior to how these activities are financed, assets are depreciated, amortized and impaired, the impact of foreign exchange, how the results are taxed in various jurisdictions and effects of share-based payment expense.

Adjusted EBITDA from investment in joint venture is calculated as follows:


Three months ended March 31,
($ thousands)		2015	2014
EBITDA from investment in joint venture		4,092	(131)
Plus:
	Foreign exchange	200	(4)
Adjusted EBITDA from investment in joint venture		4,292	(135)

"Adjusted net earnings" is used by management and the investment community to analyze net earnings prior to the effect of foreign exchange, share-based payment expense, any gains or losses on the sale of assets in the period and impairment charges, including taking into account the tax effects of these items. This measure is not intended to represent net earnings as calculated in accordance with IFRS. Adjusted net earnings is a useful measure because it provides an indication of results of the Company's principal business activities before consideration of fluctuations in foreign exchange gains and losses, impairment and share-based payment expenses, which are not consistently incurred period over period.

"Working capital" is used by management and the investment community to analyze the operating liquidity available to the Company.

"Senior Debt to Bank EBITDA" is defined as the consolidated balance of the revolving facility and other debt secured by a lien at quarter end to consolidated Bank EBITDA for the trailing 12 months (TTM). Bank EBITDA used in this financial ratio is calculated as EBITDA plus impairment expense, loss (gain) on sale of property and equipment, loss (gain) from investment in joint venture, share-based payment expense and unrealized foreign exchange.

"Total Debt to Bank EBITDA" is defined as the consolidated balance of long-term debt, which includes the Senior Debt, Senior Notes Payable and dividends payable at quarter end less unrestricted cash in excess of $10.0 million, to consolidated Bank EBITDA for the TTM. Bank EBITDA used in this financial ratio is calculated as EBITDA plus impairment expense, loss (gain) on sale of property and equipment, loss (gain) from investment in joint venture, share-based payment expense and unrealized foreign exchange.

Total Debt to Bank EBITDA is calculated as follows:


As At		March 31,	December 31,
($ thousands)		2015	2014
Total Debt:
	Senior notes, principal (US$450.0 million)	569,970	522,045
	Draw on credit facility	65,000	15,000
	Bank overdraft	4,356	-
	Dividends payable	6,671	6,758
	Letters of credit	82	75
	Cash in excess of $10.0 million	(63,625)	(61,062)
		582,454	482,816
Bank EBITDA (TTM):
	Net earnings	(7,036)	6,596
	Income taxes	(6,847)	4,076
	Financing costs	40,998	39,531
	Depreciation and amortization	118,369	125,012
	Impairment	77,535	77,535
	(Gain) loss from investment in joint venture	(1,421)	(19)
	(Gain) loss on sale of property and equipment	1,201	(8,238)
	Unrealized foreign exchange	8,983	4,580
	Share-based payment expense	(4,383)	765
		227,399	249,838

Total Debt to Bank EBITDA		2.56	1.93

"Bank EBITDA to Cash Interest Expense" is defined as the consolidated Bank EBITDA for TTM to the cash interest expense on all debt balances for TTM. Bank EBITDA used in this financial ratio is calculated as EBITDA plus impairment expense, loss (gain) on sale of property and equipment, loss (gain) from investment in joint venture, share-based payment expense and unrealized foreign exchange.

"Drilling days" is defined as rig days between spud to rig release.

"Operating days" is defined as moving days (move in, rig up and tear out) plus drilling days (spud to rig release).

"Utilization rate - drilling day" is defined as drilling days divided by total available rig days.

"Utilization rate - operating day" is defined as operating days divided by total available rig days.

"Rate per operating day" or "Dayrate" is defined as operating revenue (net of third party costs) divided by operating days (drilling days plus moving days).

ADDITIONAL GAAP MEASURES DEFINITIONS

The Company uses certain additional GAAP financial measures within the financial statements and MD&A that are not defined terms under IFRS to assess performance. Management believes that these measures provide useful supplemental information to investors, and provide the reader a more accurate reflection of our industry. These financial measures are computed on a consistent basis for each reporting period and include Funds provided by operations, Operating income, Operating income percentage and Operating income - net percentage. These additional GAAP measures are identified and defined as follows:

"Funds provided by operations" is used by management and investors to analyze the funds generated by Trinidad's principal business activities prior to consideration of working capital, which is primarily made up of highly liquid balances. This balance is reported in the Consolidated Statements of Cash Flows included in the cash provided by operating activities section.

"Operating income" is used by management and investors to analyze overall and segmented operating performance. Operating income is not intended to represent an alternative to net (loss) earnings or other measures of financial performance calculated in accordance with IFRS. Operating income is calculated from the consolidated statements of operations and comprehensive income and from the segmented information contained in the notes to the consolidated financial statements. Operating income is defined as revenue less operating expenses.

"Operating income percentage" is used by management and investors to analyze overall and segmented operating performance, including third party recovery and third party costs, as well as inter-segment revenue and inter-segment operating costs. Operating income percentage is calculated from the consolidated statements of operations and comprehensive income and from the segmented information in the notes to the consolidated financial statements. Operating income percentage is defined as operating income divided by revenue.

"Operating income - net percentage" is used by management and investors to analyze overall and segmented operating performance excluding third party recovery and third party costs, as well as inter-segment revenue and inter-segment operating costs, as these revenue and expenses do not have an effect on consolidated net (loss) earnings. Operating income - net percentage is calculated from the consolidated statements of operations and comprehensive income and from the segmented information in the notes to the consolidated financial statements. Operating income - net percentage is defined as operating income less third party G&A expenses divided by revenue net of operating and G&A third party costs.

FORWARD-LOOKING STATEMENTS

The MD&A contains certain forward-looking statements relating to Trinidad's plans, strategies, objectives, expectations and intentions. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this MD&A. The forward-looking information and statements included in this MD&A are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements. In particular, but without limiting the foregoing, this MD&A may contain forward-looking information and statements pertaining to the completion of announced rig construction programs on a timely basis and economical terms; the assumption that Trinidad's customers will honour their take-or-pay contracts; fluctuations in the demand for Trinidad's services; the ability for Trinidad to attract and retain qualified personnel, in particular field staff to crew the Company's rigs; the existence of competitors, technological changes and developments in the oilfield services industry; the existence of operating risks inherent in the oilfield services industry; assumptions respecting capital expenditure programs and other expenditures by oil and gas exploration and production companies; assumptions regarding commodity prices, in particular oil and natural gas; assumptions respecting supply and demand for commodities, in particular oil and natural gas; assumptions regarding foreign currency exchange rates and interest rates; the existence of regulatory and legislative uncertainties; the possibility of changes in tax laws; and general economic conditions including the capital and credit markets; assumptions made about future performance and operations of the joint venture arrangement. Trinidad cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this MD&A speak only as of the date of this MD&A and Trinidad assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

SOURCE Trinidad Drilling Ltd.

For further information:

Lyle Whitmarsh
Chief Executive Officer

Brent Conway
President

Lisa Ottmann
Vice President, Investor Relations
(403) 294-4401
email: investors@trinidaddrilling.com