The recent drop in oil prices has wreaked havoc in the economic sphere. As the prices continue to fall, businesses are being closed down, entire provinces are plunging deeper into recession, and unemployment is increasing every single day.
As many oil companies cut down their operations and limit their activity, it is natural to assume that it will have a rippling impact on suppliers of equipment. These suppliers should, theoretically, suffer huge losses due to a corresponding decline in the sale of the equipment.
But this is the exact opposite of what’s happening with Canada-based Trinidad Drilling Ltd.
Company officials say that, despite of the continuing drop in oil prices, there has been an increase in the number of customers looking for oil rigs for operations mainly in Alberta and Texas. Although the signs may seem encouraging, the company does not expect a significant boost in sales until there is a noticeable recovery in oil prices.
But all is not well for the company.
The sales may be going well but the state of the operations does not look so good. Currently, only 18 percent of Trinidad’s existing fleet of 139 rigs is in operation. In fact, the company said it generated more revenue from rigs not in use than from actual drilling. More than half of the revenue it generated in the second quarter was through cancelled drilling contracts and standby fee paid by clients who were not using the drills.
Originally based in Calgary, Trinidad Drilling has a key stake in the drilling sector of the oil and gas industry of North America. The company oversees a wide range of drilling operations in Canada and United States.
“It appears that the industry conditions may have reached bottom,” says the chief executive of Trinidad, Lyle Whitmarsh. “But we do not believe that it is now the time to sit back and relax. Recovery may be bumpy and it may be a longer period of time than we have seen in previous cycles.”