Trican Well Service Ltd.
TSX : TCW

Trican Well Service Ltd.

January 10, 2011 17:47 ET

Trican Announces 2011 Russian Contract Update

CALGARY, ALBERTA--(Marketwire - Jan. 10, 2011) - Trican Well Service Ltd. ("Trican") (TSX:TCW) is pleased to announce another successful conclusion to the annual Russian contract tendering season. Based on the work scope awarded, management expects Trican Russia's 2011 activity levels to increase by approximately 7% relative to the activity levels experienced in 2010.

Overall bidding for the 2011 contracts was very aggressive with a number of competitors attempting to gain market share. Despite this challenging bidding environment, Trican Russia continues to maintain its diversified customer portfolio and a leading position in the Russian fracturing market.

Management estimates 2011 fracturing pricing, expressed in Russian rubles, to increase approximately 8%, which is expected to produce a 6% increase in overall average revenue per job. Management's forecast of a larger increase in coiled tubing and nitrogen activity relative to the increase anticipated in the fracturing service line will slightly reduce overall revenue per job. Coiled tubing and nitrogen average revenue per job are typically significantly lower than the fracturing service line.

Management's main objective during the 2011 tender season was to increase prices in order to offset the continued cost pressures resulting from the high levels of inflation being experienced in the Russian market. Most notably, Trican Russia has recently experienced significant cost inflation relating to proppant, chemicals and other product costs. The price increases achieved during the tendering season are expected to meaningfully offset the cost inflation being experienced in the Russian market. That being said, management does not currently anticipate the Russian operations' 2011 margins to significantly increase relative to 2010. As a result, the focus of the Russian management team for 2011 will be on optimizing the cost structure of Trican Russia and maintaining our superior level of customer service in the Russian market.

Overall, management is satisfied with its performance in the 2011 Russian tendering season. Our strong market share position was maintained and the pricing increase is expected to help offset the cost inflation currently being experienced in the Russian market. We expect reasonable utilization levels on our existing equipment fleet; however, we do not currently anticipate any significant fleet expansion during 2011. Margins need to considerably improve relative to current levels to achieve the economic returns necessary to support meaningful capital expansion in the Russian market.

Forward Looking Statement Disclaimer

This press release contains forward-looking statements, including, but not limited to, statements regarding Trican Russia's 2011 activity levels, 2011 fracturing pricing and average revenue per job, coiled tubing and nitrogen activity, the impact of activity, pricing and cost inflation on margins, potential offsetting of inflation with increased prices, equipment utilization levels and 2011 fleet expansion.

These forward-looking statements are based on Trican's current assumptions and beliefs. However, these forward-looking statements are subject to, and may be affected by, numerous risks and uncertainties, some of which are beyond Trican's control. Trican's results may differ from those expressed in, or implied by, such statements. Factors that could cause or contribute to these differences include: our ability to successfully perform under the contract; fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; exchange rates; inflation levels in Russia; weather conditions; regulatory changes; the successful exploitation and integration of technology; customer acceptance of technology; success in obtaining issued patents; the potential development of competing technologies by market competitors; and availability and pricing of products, qualified personnel, manufacturing capacity and raw materials and other factors described in Trican's pubic reports and filings, which are available under Trican's profile at www.sedar.com. Forward-looking statements are subject to change, and Trican does not undertake to update, correct or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by applicable law.

Headquartered in Calgary, Alberta, Trican has operations in Canada, Russia, the US and North Africa. Trican provides a comprehensive array of specialized products, equipment and services that are used during the exploration and development of oil and gas reserves.

Contact Information

  • Trican Well Service Ltd.
    Dale Dusterhoft
    Chief Executive Officer
    (403) 266-0202
    (403) 237-7716 (FAX)
    ddusterhoft@trican.ca
    or
    Trican Well Service Ltd.
    Michael Baldwin
    Vice President, Finance and Chief Financial Officer
    (403) 266-0202
    (403) 237-7716 (FAX)
    mbaldwin@trican.ca
    or
    Trican Well Service Ltd.
    2900, 645 - 7th Avenue S.W.
    Calgary, Alberta T2P 4G8
    www.trican.ca