Annual Information Form - Trinidad Drilling AIF.pdf · Corporate Structure 3 Trinidad Drilling Ltd....

March 30, 2016

Annual Information Form

For the year ended December 31, 2015

Corporate Structure

Trinidad Drilling Ltd. – 2015 Annual Information Form

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ANNUAL INFORMATION FORM CONTENTS

Corporate Structure ............................................... 2 Trinidad Drilling Ltd. ........................................................... 2 Trinidad Drilling Limited Partnership .................................. 2 The Axxis Group .................................................................. 3 Victory Rig Equipment Corporation .................................... 3 Joint Ventures ..................................................................... 3 Organizational Chart ........................................................... 4

General Development ............................................ 5 Three Year History ............................................................... 5 2015 .................................................................................... 5 2014 .................................................................................... 7 2013 .................................................................................... 8 Trends .................................................................................. 9

About Our Business .............................................. 10 Land Drilling Services ......................................................... 11 Segmented Information ..................................................... 12 Canadian Operations ........................................................ 12 US and International Operations ...................................... 13 Joint Venture Operations .................................................. 15 Manufacturing Operations ............................................... 17 Corporate .......................................................................... 18 Other Operational Information ........................................ 18 Risk Factors ....................................................................... 21 Dividend Policy .................................................................. 30

General Description of Capital Structure ............... 31 Common Shares ................................................................ 31 Preferred Shares ............................................................... 31 Credit Facility .................................................................... 32 Senior Notes ..................................................................... 32 Other Debt ........................................................................ 33 Credit Ratings .................................................................... 33 Market for Securities ........................................................ 35

Directors and Officers ........................................... 36 Directors of Trinidad .......................................................... 36 Officers of Trinidad ............................................................ 37 Security Holdings of Directors and Officers ....................... 37 Audit Committee ............................................................... 37 Composition of the Audit Committee ............................... 38 Relevant Education and Experience .................................. 38 Compliance with Audit Committee Rules .......................... 39 External Auditor Service Fees ............................................ 39 Cease Trade Orders, Bankruptcies, Penalties or Sanctions ....................................................... 39 Conflicts of Interest ........................................................... 40 Legal Proceedings and Regulatory Actions ........................ 40 Interest in Material Transactions ...................................... 41

Transfer Agents and Registrars ............................. 41

Material Contracts................................................ 41

Interests of Experts .............................................. 42

Additional Information ......................................... 42

Forward-Looking Information ............................... 43

Definitions, Abbreviations & Conversions ............. 46 Definitions ......................................................................... 46 Abbreviations & Conversions ............................................ 48

Schedule A - Audit Committee Charter .................. 49 Establishment of Committee ............................................. 49 Committee Procedure ....................................................... 50 Mandate of Committee ..................................................... 51

In this Document

− We, us, our, the Company and Trinidad mean

Trinidad Drilling Ltd.

A full list of definitions and abbreviations can be found on page 46.

For More Information

You can find our 2015 financial statements and management’s discussion and analysis (MD&A) as well as our quarterly reports on our website (www.trinidaddrilling.com) or SEDAR (www.sedar.com).

Information contained or otherwise accessible through Trinidad’s website or other websites, though referenced herein, does not form part of and is not incorporated by reference into this Annual Information Form.

Copies of these documents are also available for free by contacting our Investor Relations department:

Investor Relations Trinidad Drilling Ltd. 1000, 585 8 Avenue SW Calgary, Alberta T2P 1G1

https://www.trinidaddrilling.com/investors/information-circular

http://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00013540

Corporate Structure


2

CORPORATE STRUCTURE

Trinidad Drilling Ltd.

Trinidad Drilling Ltd. was incorporated under the Business Corporations Act (Saskatchewan) on February 23, 1996 as 614651 Saskatchewan Ltd. On May 9, 1996, we changed our name to Trinidad Drilling Ltd. On June 29, 1999, we continued into Alberta under the Business Corporations Act (Alberta) (ABCA). As of June 30, 1999, we amalgamated with 804969 Alberta Ltd. and continued operating as Trinidad Drilling Ltd. In connection with this amalgamation, Trinidad amended its articles to remove its private company restrictions in preparation of going public.

Trinidad began trading under the symbol ‘TDG’ on the Toronto Stock Exchange (TSX) on October 11, 2000. On September 17, 2002, Trinidad was amalgamated with AcquisitionCo and became a wholly-owned subsidiary of the Trust (Trinidad Energy Services Income Trust) pursuant to the 2002 Arrangement. Following the 2002 Arrangement, the Trinidad Shares were delisted from the TSX and the Trust Units commenced trading on the TSX under the symbol ‘TDG.UN’.

On March 11, 2004, the articles of Trinidad were amended to add the Exchangeable Shares as a class of shares and to create the first set of Exchangeable Shares (the Exchangeable Shares, Series A).

On July 26, 2004 and May 2, 2005, the articles of Trinidad were amended to create the second series of Exchangeable Shares (the Exchangeable Shares, Series B) and the third series of Exchangeable Shares (the Exchangeable Shares, Series C), respectively.

Effective January 1, 2008, Trinidad amalgamated with Titan Surface Casing Ltd. (Titan) and 1118872 Alberta Ltd. The amalgamated corporation continued as Trinidad Drilling Ltd.

On March 10, 2008, Trinidad completed the 2008 Arrangement, pursuant to which, the Trust Units were delisted from the TSX and the Trinidad Shares commenced trading on the TSX, again under the symbol ‘TDG’.

On May 10, 2013, Trinidad filed articles of amendment under the ABCA to increase the maximum number of directors of Trinidad to 11 after receiving shareholder approval for such amendment.

The head and principal office of Trinidad is located at 1000, 585 - 8th Avenue SW, Calgary, Alberta, T2P 1G1. Trinidad's registered office is located at 3500, 855 – 2nd Street SW, Calgary, Alberta, T2P 4J8.

Trinidad is extra-provincially registered to carry on business in Manitoba, Saskatchewan, Nova Scotia, British Columbia and the Northwest Territories.

Trinidad Drilling Limited Partnership

On October 12, 2005, Trinidad Drilling Limited Partnership (TDLP) was formed pursuant to the laws of the state of Delaware to be the operating entity for Trinidad's US Operations. TDLP is an indirect, wholly-owned subsidiary of Trinidad. TDLP provides contract drilling services to the United States oil and gas industry. The head and principal office of TDLP is located at 15015 Vickery Drive, Houston, Texas, 77032, USA,

Corporate Structure


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and the registered address of TDLP is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808, USA.

The Axxis Group

The Axxis Group is comprised of Axxis Drilling Inc., Axxis Drilling (Land) Inc., and Axxis Drilling (Bareboat) Inc., which were collectively formed on July 5, 2007, pursuant to the laws of the State of Delaware, and are indirectly owned by Trinidad.

The head and principal office functions of the Axxis Group are performed at its office at 229 Development Street, Houma, Louisiana, 70363, USA. The Axxis Group's registered office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808, USA.

Victory Rig Equipment Corporation

Effective January 1, 2009, Victory Corporation, Mastco Derrick Service Ltd., (Mastco) and Automated Controls and Electric Inc. (ACE) were amalgamated under the ABCA combining Trinidad's existing manufacturing entities, Mastco and ACE, with the oilfield fabrication equipment business of Victory Corporation acquired by Trinidad pursuant to the Victory Acquisition.

The amalgamated corporation continued as Victory Rig Equipment Corporation (Victory). Victory conducts business using the trade name Trinidad Design & Manufacturing (TDM). TDM's registered office is located at #3500, 855 – 2nd Street SW, Calgary, Alberta, T2P 4J8. TDM also has a division in the US, located at 15015 Vickery Drive, Houston, Texas, 77032.

The head and principal office functions of TDM are performed at 1026 - 30th Avenue, Nisku, Alberta, T9E 0S2.

Joint Ventures

TRINIDAD DRILLING INTERNATIONAL

Effective September 3, 2013, Trinidad, through a wholly-owned subsidiary, entered into a joint venture arrangement with a wholly-owned subsidiary of Halliburton to operate drilling rigs for international projects outside of Canada and the US. TDI-JV currently has operations in Saudi Arabia and Mexico. Additionally, TDI-JV continues to look into future growth opportunities in other international markets.

Trinidad owns 60% of the shares of TDI and each of the joint parties have equal voting rights. Trinidad considers the investment to be a financial asset at fair value through profit or loss and recognizes changes in fair value of the investment in the statement of operations and comprehensive income (loss) as a gain (loss) from joint ventures.

The shareholders agreement for TDI-JV was signed by each of the participating parties effective September 3, 2013.

TDI-JV's registered office is located at 9 Allée Scheffer, L-2520 Luxembourg.

DIAVAZ CANELSON DE MEXICO, S.A. DE C.V.

As part of the CanElson Acquisition, Trinidad acquired a 50% ownership in DCM-JV, a joint venture which operates drilling and service rigs in Mexico. DCM-JV currently has two drilling rigs and two service rigs in Mexico.

Corporate Structure


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Organizational Chart

The simplified organizational structure of Trinidad, including the material subsidiaries of Trinidad is set forth below:

The US Consolidated Group includes TDLP and the Axxis Group.

The TDI-JV includes operations in Saudi Arabia and Mexico, and is owned 60% by Trinidad through a wholly-owned subsidiary and 40% by Halliburton.

The DCM-JV includes operations in Mexico, and Trinidad and D&S Petroleum, S.A. de C.V., a wholly owned subsidiary of Grupo Diavaz, S.A. de C.V. both have a 50% interest in DCM. Trinidad’s 50% ownership of DCM-JV is held directly by Trinidad Drilling Ltd.

Trinidad Drilling Ltd. (Alberta)

Victory Rig Equipment Corporation

(Alberta) 100%

US Consolidated Group

(Delaware)

100%

Trinidad Drilling International Joint Venture (Luxembourg)

60%

General Development


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GENERAL DEVELOPMENT

Trinidad, the US Consolidated Group and the Joint Venture Operations provide contract drilling services to the Canadian, the US and international oil and gas industry respectively. TDM is a drilling rig and equipment construction and fabrication business which builds and maintains and recertifies drilling rigs and related equipment.

At December 31, 2015, we had a total of 139 land drilling rigs, 72 in Canada, 66 in the US and one in the United Arab Emirates (UAE). Through our Joint Venture Operations, Trinidad has interests in 10 drilling rigs (four in Saudi Arabia and six in Mexico).

Three Year History The following describes the significant events of the last three years in respect of the business:

2015

Acquisition. In 2015, Trinidad acquired CanElson by way of Plan of Arrangement, adding 51 land drilling rigs to our operations across North America, growing our geographic relevance in key operating areas, expanding our product offering and customer base, and reducing overall corporate leverage. The rigs added through the CanElson Acquisition included 28 rigs in Canada, 21 rigs in the US and two rigs in Mexico. The rigs are highly-marketable, modern, deep-focused assets with an average age of approximately 5.6 years at the time of acquisition. The acquisition was financed through a combination of the issuance of approximately 88.7 million Trinidad shares and the payment of $50 million of cash. Integration of the CanElson operations began in the third quarter and was largely complete by the end of 2015. A business acquisition report in respect of the CanElson Acquisition was filed by Trinidad under its SEDAR profile at www.sedar.com on August 21, 2015.

TDI-JV. During 2015, four rigs were operating under TDI-JV in Saudi Arabia. In Mexico, two rigs were operating at the beginning of 2015 and construction was completed on two additional rigs, with all four rigs operating in Mexico by the end of 2015.

TDI-JV has the right of first look at Halliburton's onshore integrated project management contract drilling opportunities outside of Canada and the US. We are the majority shareholder in TDI-JV with 60% ownership, and Halliburton has 40% ownership, with each party contributing future capital in these respective proportions. TDI-JV conducts business under the name Trinidad Drilling International.

TDI-JV has an indefinite term; although, either party may exit after five years, or earlier under certain circumstances. TDI-JV’s arrangement includes non-competition provisions, and both Trinidad and Halliburton provide certain services to the joint venture.

48%

45%

7%

Trinidad's Rig Fleet

Canada US & International Joint Ventures

http://www.sedar.com/

General Development


6

DCM-JV. As part of the CanElson acquisition, effective August 11, 2015, we acquired 50% ownership of a joint venture operating under the name Diavaz CanElson de Mexico, S.A. de C.V. DCM-JV operates two land drilling rigs and two service rigs in Mexico.

Non-Controlling Interests – As part of the CanElson acquisition, we also acquired four non-controlling interests - Midland C Ranch Holdings, LLC (Midland), CanElson 120601 Drilling Partnership #1 (LP#1), CanElson 120601 Drilling Limited Partnership #2 (LP#2), and CanElson 120601 Drilling Limited Partnership #3 (LP#3). Trinidad holds 50% of the outstanding membership units of Midland, 50% of the outstanding limited partnership units in LP#1, 54.4% of LP#2 and 50% of LP#3. Subsidiary companies of Midland operate three rigs in the US, while each of LP#1, LP#2 and LP#3 operate one rig in Canada.

Drilling Rig Construction. In early 2015, TDM completed construction on a new rig for our Canadian operations. This rig is a 3,000 horsepower, AC triple rig with a depth capacity of 8,500 metres and is backed by a long-term contract.

During 2015, TDM completed construction on two new rigs for operation in Mexico through the TDI-JV. The rigs are 3,600 horsepower, AC triple rigs with depth capacity of 8,000 metres and are backed by long-term contracts.

TDM completed construction and delivered three new builds to our US and International Operations. The rigs are 1,500 horsepower, AC triple rigs with a depth capacity of 6,100 metres and are backed by long-term contracts. We also completed construction on a training rig we were building for our TDI-JV partner, Halliburton.

Toward the end of 2015, activity in Trinidad’s manufacturing operations declined significantly as rig construction was largely complete. Due to the reduced activity levels, we restructured TDM, moving repair and maintenance work to each of the operating divisions and outsourcing less technical rig design and construction work.

Rig Decommissioning and Impairment. Due to current market conditions and the future outlook of drilling activities, we determined that indicators of impairment existed. Under IFRS, we assessed the carrying value of assets in our cash generating units by comparing the total estimated future cash flows to the net book value at December 31, 2015. We evaluated our rig fleet to identify rigs that would be considered lower specification equipment with high costs to maintain. As such, we decommissioned 15 rigs at the end of 2015. Of these rigs, 10 were included in the Canadian Operations and five were included in the US and International Operations. Trinidad believes that it continues to hold equipment that will allow it to remain competitive into future periods.

Credit Facility. In December 2015, we amended our credit facility and its covenants. We reduced the size of the facility to lower standby fees on funds we did not expect to access and have not historically utilized. The credit facility now includes a Canadian revolving facility of C$150 million (C$200 million previously) and a US revolving facility of US$150 million (US$200 million previously). We also relaxed our debt covenants over the next two years, providing additional financial flexibility through a potentially challenging time. The credit facility matures on December 12, 2018.

General Development


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Early Termination and Standby Revenue. As a result of weak commodity prices and reduced customer capital spending, several customers terminated their contracts early or chose to not operate rigs under contract. As a result, we recorded $53 million in early termination and standby revenue in 2015, compared to $19 million in 2014. Long-term contracts must have an initial term of one year to be considered long-term, and typically range from one to five years in duration. Following the contract terminations in 2015, approximately 30% of our fleet was under long-term contracts with an average remaining term of approximately 1.3 years, at year end.

Normal Course Issuer Bid. In November of 2014, we announced the approval to acquire for cancellation, by way of normal course issuer bid, up to 12,299,009 common shares of the Trinidad, which represented approximately 10 percent of our public float. The normal course issuer bid expired on November 26, 2015. During 2015, we purchased and cancelled 1,732,380 common shares for total consideration of $8.4 million.

2014

TDI-JV. In 2014, TDI-JV commenced operations in Saudi Arabia. During 2014, Trinidad sold three existing US-based rigs to TDI-JV and constructed one new rig for TDI-JV. All four rigs operated under TDI-JV in Saudi Arabia in 2014. The newly constructed rig was built by TDM. TDM also began construction on four new rigs for operation in Mexico through TDI-JV. The first two rigs were delivered to Mexico in late 2014.

Drilling Rig Construction. In 2014, TDM worked on the construction of one rig destined for northern Canada which was announced in 2013.

As noted above, TDM built a new rig for TDI-JV, for operation in Saudi Arabia and began construction on four new rigs for operation in Mexico.

In addition, TDM began construction on three new builds for Trinidad’s US and International Operations. The rigs were completed and delivered in 2015.

We also selected several rigs for upgrade in 2014. The upgrades on these rigs included improvements to increase the efficiency and performance of the rigs such as adding moving systems and top drives, changing to AC drawworks and upgrading pumping capacity. These changes increased the marketability of the equipment and resulted in some improved dayrates and extended contract terms.

Redeployment of Mexican rigs. Our three rigs that had been operating in Mexico completed their contracts in 2013 and were redeployed to Canada in 2014.

Rig Decommissioning. As a result of changing industry conditions and a growing acceptance of the benefits of high performance, modern equipment, we reviewed our fleet and decommissioned 22 rigs in 2014. Of these rigs, 13 had previously operated in Canada and nine had previously operated in the US. The rigs were older, mechanical style rigs that were no longer in demand by customers.

Normal Course Issuer Bid. In November of 2014, we announced the approval to acquire for cancellation, by way of normal course issuer bid, up to 12,299,009 common shares of the Trinidad, which at the time represented approximately 10 percent of our public float. As of December 31, 2014, we purchased and cancelled 3,038,060 common shares for total consideration of $16.5 million.

General Development


8

Credit Facility. In 2014, Trinidad terminated its 2010 credit facility and entered into a new agreement, including additional commitments under the US dollar denominated revolving facility. The new credit facility included a Canadian revolving facility of C$200 million and a US revolving facility of US$200 million (US$100 million previously).

Early Termination and Standby Revenue. During 2014, we received $19 million in early termination and standby revenue on long-term, take-or-pay contracts. Following these contract terminations, at year end, approximately 45% of our fleet was under long-term contracts with an average remaining term of approximately 1.6 years.

2013

TDI-JV. In 2013, we announced that we had entered into a joint venture arrangement with a wholly-owned subsidiary of Halliburton to provide and operate drilling rigs for Halliburton’s international integrated projects.

Drilling Rig Construction. In 2013, we completed the construction of two rigs that were originally included in the 2012 new build program, with delivery in the first half of 2013 into our Canadian Operations. Both rigs are 1,500 horsepower, AC triple rigs with depth capacities of 4,500 metres, and backed by long-term contracts.

Additionally, TDM announced the construction of two new builds which were delivered in the second half of 2014 and in early 2015. The first was to be built for TDI-JV, for operation in Saudi Arabia. The second, was to be built for our Canadian Operations, for delivery into the Liard Basin, an area being developed to supply gas for the future potential liquefied natural gas plants.

Sale of Coring Assets. During the second quarter of 2013, we sold our coring and pre-set rigs, including all related inventory for $12.0 million in cash. The sale of these assets was in-line with our strategy to dispose of underutilized and non-core assets.

Early Termination and Standby Revenue. During the fourth quarter of 2013, we received lump sum contract termination revenue in relation to five rigs that were on long-term contracts. Following these contract terminations, at year end 2013, approximately 40% of our fleet was under long-term, take-or-pay contracts with an average remaining term of approximately 1.5 years.

Bought Deal Equity Financing. In December of 2013, we announced the closing of a bought deal equity financing. A total of 17,250,000 common shares were issued at a price of $10.00 per common share for gross proceeds of $172.5 million. This amount included the full exercise by the underwriters of their over-allotment option to purchase up to an additional 2,250,000 common shares. The net proceeds raised from the offering were used to fund capital expenditures on new and existing assets, as well as for growth initiatives and general corporate purposes.

General Development


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Trends The added efficiency of high performance rigs has become more widely recognized in the drilling industry over the past few years. As a result, the proportion of wells being drilled either horizontally or directionally continues to increase in Canada, the U.S and also internationally. The significant focus on extended-reach horizontal drilling across North America and deeper wells generally translates into higher drilling days per well. This impact is partly offset by the use of high performance rigs that operate more efficiently and can reduce overall drilling time. These trends benefit Trinidad as our deeper capacity, modern asset base has been built to service these markets.

During the past few years, there has been an increased demand for higher specification equipment, and this focus continued in 2015. Oil and gas exploration and production companies are putting increased emphasis on rig performance and efficiency. Improved drilling efficiencies improve the economics of their development programs. This has created a greater demand for higher specification equipment, at the expense of the older, conventional style rigs. These competitive conditions make the market a more challenging one to operate in; however, with approximately 80% of Trinidad's fleet considered high specification, we have been able to establish a reputation as a high performance driller and are well positioned to operate in these conditions. We are continuously reviewing existing rig designs in light of changing drilling techniques. Our research allows us to refine our rig designs and improve performance and efficiency. We have extensive in-house rig construction and design experience and build technically- advanced, highly-competitive drilling rigs, which is evident from our historically higher utilization rates.

The ability to add more production per well through advanced drilling and completion techniques has increased the supply of oil, particularly in North America. This combined with a continuing strong supply of oil from OPEC countries resulted in lower oil prices towards the end of 2014 and throughout 2015.

The weaker commodity prices led to a strong pull back in drilling activity across North America. The impact of lower customer demand was initially felt in the conventional, mechanical style rigs; however, spot market rates and activity levels for high performance equipment were also impacted as commodity prices weakened further. In reaction to these market conditions, we have lowered costs, reduced our headcount, cut back on capital expenditures program and reduced our dividend. We expect that activity levels and dayrates will remain lower in 2016 until there is an improvement in oil or natural gas prices.

About Our Business


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ABOUT OUR BUSINESS

Trinidad's operations are carried out in four reportable segments: Canadian Operations; US and International Operations; Manufacturing Operations; and Joint Venture Operations.

Trinidad's revenue by operating segment is outlined below:

($ thousands) 2015 2014

Canadian Operations 202,064 353,950

US and International Operations 306,513 497,265

Manufacturing Operations 125,131 191,535

Joint Venture Operations1 - -

Inter-segment Eliminations2 (83,082) (102,870)

Corporate 1,273 1,454

Total Revenue 551,899 941,334

1. The DCM-JV is recognized using the equity method of accounting. For the TDI-JV, Trinidad considers the investment to be a financial asset at fair value through profit or loss and recognizes changes in fair value of the investment in the statement of operations and comprehensive income (loss) as a gain (loss) from joint ventures.

2. Inter-segment Eliminations consist of revenue earned by the manufacturing division for work performed for other internal segments of Trinidad. This revenue is eliminated on consolidation.

In 2015, Trinidad’s segmented land drilling rig fleet operated in Canada and the US, as well as Saudi Arabia and Mexico through joint venture partnerships. At December 31, 2015, we operated 149 land drilling rigs.

0

20

40

60

80

100

120

140

160

Trinidad Rig Count

Canada US & International Joint Venture*

* JV rigs included at 100%.

About Our Business


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Land Drilling Services Land drilling services are provided to oil and gas exploration and production companies. These services are completed using drilling rigs and auxiliary equipment, and are performed at the request of oil and gas exploration and production companies we have entered into contracts with. The customer provides us with instructions for the drilling of the oil or gas well at a specified location and desired depth. We provide a drilling rig with required personnel, and the customer supervises the drilling of the well. Typically the customer agrees to pay a fixed rate per day regardless of the number of days needed to drill the well. Contracts usually provide for a reduced dayrate (or lump sum amount) to mobilize the rig to the well location, to rig-up and rig-down on location, and to demobilize the rig. Generally, we do not bear the costs arising from down-hole risks.

If the customer determines that the well is economical, the drilling rig will set the production casing for the well. The drilling rig may then complete the well or cap it to provide for completion at a later date by using a service rig. If the well is not economical, the drilling rig plugs and abandons the well.

Land drilling contracts can be for single or multiple wells and can vary in length from a day to multiple years. Long-term contracts typically have set dayrates, an agreed minimum number of operating days (typically ranging from one to five years) and include early termination penalties, cost escalation provisions, and options for renewing the contract. Short-term contracts that provide drilling rigs on a well-to-well basis are typically subject to termination by the customer on short notice or with little or no penalty.

In weak market conditions, we typically sign less long-term contracts, preferring to wait until conditions improve before committing to long-term dayrates. In addition, weak commodity prices can cause an increased number of customers to cancel contracts early.

About Our Business


12

Segmented Information

Canadian Operations

PRINCIPAL PRODUCTS, SERVICES AND OPERATIONS

The Canadian Operations provide one principal component: land drilling services to the Canadian oil and gas industry.

Land Drilling Services

Canadian Operations land drilling revenue was approximately 37% of Trinidad’s total consolidated revenue for 2015 and 38% of Trinidad's total consolidated revenue for 2014.

At December 31, 2015, our Canadian Operations operated a fleet of 72 land drilling rigs in Canada.

PRINCIPAL MARKETS

The Canadian Operations are presently conducted in the Western Canadian Sedimentary (WCSB) and Williston Sedimentary Basins (WSB), which includes portions of the provinces of British Columbia, Alberta, Saskatchewan and Manitoba, and portions of the Northwest Territories. The WCSB and the WSB are two of the largest oil and gas exploration and producing regions in North America. A substantial portion of the active production from these basins occurs at shallow and intermediate depths from both conventional and non-conventional reservoirs. Non-conventional oil deposits in Canada include the Alberta oilsands, the heavy oil deposits of Saskatchewan, the Canadian East Coast, the Arctic Islands and the Beaufort Sea. Non-conventional natural gas reserves include coalbed methane gas and tight sands reservoirs.

Development of unconventional natural gas reservoirs of shale gas in Canada, where drilling is primarily focused on deep gas plays which are contained in tight gas formations, has increased in the past few years. This follows the advancement of drilling and completion techniques that have made the development of these types of reserves more economically viable.

The main shale plays in Canada are the Montney, the Duvernay and Horn River Basin which are primarily located in north-eastern British Columbia but also cross into parts of Alberta and Northwest Territories. Activity in these conventional oil and natural-gas-liquids-rich plays across WCSB and the WSB has great potential with advances in drilling and completion techniques.

8%

74%

18%

Canadian Rig Fleet

Single

Double

Triple

21%

40%

39%

Canadian Rig Fleet Age

< 5 years

5-10 years

> 10 years

About Our Business


13 13

There is still interest in western Canada’s natural gas reserves. Asian national oil companies and major exploration and production companies are pursuing liquefied natural gas projects that are expected to take lower-cost Canadian natural gas, liquefy it and ship it to Asia where pricing is significantly higher. These projects are awaiting regulatory approval and final investment decisions. Development is expected to increase if these approvals are received and investment decisions are made to proceed. In 2015, weak commodity prices and ongoing regulatory reviews contributed to delays in liquefied natural gas projects.

The majority of oil and natural gas production in Canada originates from the WCSB and WSB. In addition to upstream oil and gas activities, other related industry activity occurs in this region, such as refining, processing and transportation of oil and gas.

COMPETITIVE CONDITIONS

The drilling industry in Canada is a competitive sector which is dominated by five large contractors accounting for over 60% of the industry's drilling fleet. Due to the age of the fleet and Trinidad's investment in drilling assets and personnel, Trinidad's drilling operations are efficient and competitive. Our Canadian utilization level typically exceeds industry average. In 2015, we averaged 29% utilization compared to 23% for the industry1 (2014 - 52% and 44%, respectively).

A drilling company is evaluated by potential customers based primarily on the performance of its equipment, drilling depth capacity, safety record and the expertise of its operational personnel. If a drilling contractor is evaluated highly in each area, it will typically achieve high utilization and strong dayrates. Trinidad strives to obtain high evaluations in each of these areas. Our Canadian Operations include some of the industry's newest and most technically advanced rigs that are suited for deeper, more complex resource plays. Our Canadian Operations’ land drilling rigs have an average age of nine years and are capable of reaching average horizontal depths of approximately 6,189 metres, and approximately 75% of the fleet is equipped with technically advanced, high performance equipment that allows the rigs to drill efficiently in today's complex and challenging drilling environments. See Risk Factors on page 21.

US and International Operations


The US Consolidated Group provides contract drilling services to the United States and international oil and gas industries

Due to the downturn of the barge market, in 2015, we decided not to market our barge rigs in the near term in order to focus on our core land drilling business. In the third quarter of 2015, all barge rigs were removed from our rig count, and the value of the barge rigs was impaired to nil.

US and International Operations land drilling revenue was approximately 56% of Trinidad’s total consolidated revenue for 2015 and 53% of Trinidad's total consolidated revenue for 2014.

1 Source: The Canadian Association of Oilwell Drilling Contractors

About Our Business


14

Land Drilling Rigs

At December 31, 2015, our US and International Operations operated a total of 66 land drilling rigs in the US and one land drilling rig in UAE.

PRINCIPAL MARKETS

The principal markets for US land drilling are the Mid-Continent, Bakken Shale, Barnett Shale, Haynesville Shale, Eagle Ford Shale, Niobrara Shale, Mississippian Lime, Tuscaloosa Marine Shale, Cleveland Sands, Granite Wash, Woodford Shale, Spraberry/Wolfcamp Shale, and East and West Texas.

The US and International Operations currently operates in the Mid-Continent, Bakken Shale, Barnett Shale, Haynesville Shale, Eagle Ford Shale, Niobrara Shale, Mississippian Lime, Tuscaloosa Marine Shale, East Texas and West Texas regions, which includes parts of New Mexico, Kansas, Oklahoma, Wyoming, North Dakota, Texas, Mississippi and Louisiana. Like Canada, activity had increased in conventional oil and natural-gas-liquids-rich plays across the US in the past few years as a result of advances in drilling and completion techniques. In 2015, we were also active in conventional plays in the Cotton Valley in East Texas and North Louisiana, where we completed the two longest laterals ever. The Mid-Continent region contains conventional reservoirs at shallow to intermediate depths, while the West Texas region has conventional reservoirs in the intermediate to deep depths. Conventional reservoirs have witnessed a renewed interest due to lower completion costs.

Drilling activity in West Texas also experienced an increase in new unconventional resource plays such as the Avalon and Spraberry/Wolfcamp Shales. New unconventional techniques have also been increasingly used on existing plays in west Texas, such as the Permian Basin. The East Texas region has conventional and unconventional natural gas tight sands reservoirs, while the Barnett Shale and Haynesville Shale regions have unconventional shale natural gas reservoirs where drilling is primarily horizontal and focused on deep gas plays which are contained in tight gas formations. The Niobrara Shale in Wyoming and Colorado has conventional and unconventional oil reservoirs at intermediate to deep depths. The Bakken Shale contains conventional and unconventional oil reservoirs at intermediate depths and the Eagle Ford Shale region contains unconventional shale reservoirs with deposits rich in natural gas liquids and oil found at intermediate to deep depths. Drilling activity is focused on horizontal wells with long reach laterals in both of these regions. The Mississippian Lime is a conventional oil and natural gas liquids play focused on shallow horizontal drilling, while the Tuscaloosa Marine Shale is an unconventional oil shale where drilling is primarily horizontal and focused on deep targets. The Cleveland Sands is an unconventional tight sand formation with oil targets being exploited currently, while the Granite Wash is an unconventional

24%

76%

US and International Rig Fleet

Double

Triple

18%

76%

6%

US and International Rig Fleet Age

< 5 years

5-10 years

> 10 years

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formation made up of granite with oil being the primary focus currently. The Woodford Shale is an unconventional shale focused on oil drilling.


The US land drilling market is a competitive sector, divided between different regions, with five of the large contractors accounting for approximately 18% of the industry's active drilling fleet as of December 31, 2015. Trinidad is the 6th largest active driller for the same time period. Trinidad has established strong working relationships with several key oil and gas exploration and production companies in the US. These relationships, the Company's history of consistent top performance and our modern, technically advanced fleet make Trinidad's US drilling operations very competitive.

Our US and International Operations’ land drilling rig fleet includes some of the industry's newest and most technically advanced rigs that are suited for deeper, more complex resource plays. Our US and International Operations' land drilling rigs have an average age of eight years and are capable of reaching average depths of approximately 5,200 metres. Approximately 80% of our US and International Operations' land drilling rig fleet is equipped with technically advanced, high performance equipment that allows the rigs to drill efficiently in today's complex and challenging drilling environments. See Risk Factors on page 21.

Joint Venture Operations

The Joint Venture Operations consist of our two international joint ventures.

Trinidad Drilling International is a drilling rig contractor that provides contract drilling services to Halliburton. Trinidad has a 60% interest in TDI-JV and Halliburton has a 40% interest. At December 31, 2015, TDI-JV operated a total of eight land drilling rigs, with four drilling rigs in Saudi Arabia and four drilling rigs in Mexico.

Diavaz CanElson de Mexico, S.A. de C.V. is a drilling rig contractor that operates in Mexico. At December 31, 2015, the DCM-JV operated a total of two land drilling rigs and two service rigs in Mexico. Trinidad and Grupo Diavaz, S.A. each have a 50% interest in DCM-JV.

PRINCIPAL MARKETS

Our joint ventures operate in the Ghwar fields in Saudi Arabia and the Villahermosa and Miquetla region in Mexico.

The Ghwar field is a large established oil field that produces Arab light crude oil. The Villahermosa region is in south eastern Mexico and is a mature producing area characterized by generally predictable and stable production levels. The DCM-JV operates in the Miquetla block, which is located in Mexico’s onshore Chicontepec basin.


The Joint Venture Operations are comprised of one principal component which provides land drilling services.

Land Drilling Services

Land drilling services are provided by TDI-JV to TDI-JV’s partner, Halliburton for their international integrated projects, and by DCM-JV for the operation of drilling and service rigs. Halliburton’s projects are typically for national oil companies or large global

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exploration and development companies. Land drilling services are completed using drilling rigs and auxiliary equipment and are performed at the request of Halliburton who has entered into contracts with TDI-JV. Halliburton and their customer issue instructions to TDI-JV for the drilling of the oil or gas well at a specified location and desired depth.

If the customer determines that the well is economical, the drilling rig will set the production casing for the well. The drilling rig may then complete the well or cap it to provide for completion at a later date by using a service rig. If the well is not economical, the drilling rig plugs and abandons the well.

Trinidad owns 60% of the shares of TDI and each of the joint parties have equal voting rights. Trinidad considers the investment to be a financial asset at fair value through profit or loss and recognizes changes in fair value of the investment in the statement of operations and comprehensive income (loss) as a gain (loss) from joint ventures.

Diavaz CanElson de Mexico, S.A. de C.V. (DCM) was acquired as part of the CanElson acquisition. Trinidad has a 50% ownership in DCM and each of the parties have equal voting rights. The joint venture partners have joint control over the relevant activities of this joint venture and as such DCM is accounted for in Trinidad’s consolidated financial statements using the equity method of accounting.

The loss from investment in Joint Ventures was approximately 0.7% of Trinidad’s total consolidated net loss for 2015 and 0.3% of the gain in 2014 Trinidad's total consolidated net earnings.

At December 31, 2015, the Joint Venture Operations operated a fleet of 10 land drilling rigs in Saudi Arabia.


TDI-JV has the first look at any contract drilling work associated with Halliburton’s integrated projects outside of Canada and the US. TDI-JV may bid on those projects that meet its return, risk and logistical requirements, without needing to bid on any projects that do not meet its internal benchmarks. TDI-JV’s bid must be competitive and its equipment must meet the specifications for Halliburton to accept the bid.

While TDI-JV’s customer is Trinidad’s partner, Halliburton, TDI-JV is evaluated based primarily on the performance of its equipment, drilling depth capacity, safety record and the expertise of its operational personnel. TDI-JV must remain competitive in all these aspects to continue to win bids with Halliburton. TDI-JV strives to obtain high evaluations in each of these areas. Trinidad’s Joint Venture Operations rig fleet includes some of the industry's newest and most technically advanced rigs that are suited for deeper, more complex resource plays.

20%

80%

Joint Ventures Rig Fleet

Double

Triple70%

30%

Joint Ventures Rig Fleet Age

< 5 years

5-10 years

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The business of DCM-JV is the operation of drilling rigs in Mexico and the ownership and operation of service rigs. DCM-JV’s primary areas of operation are the Chicontepec area in the Miquelta block.

The Joint Venture Operations’ land drilling rigs have an average age of four years and an average depth capacity of approximately 6,000 metres, and 80% of the fleet is equipped with technically advanced, high performance equipment that allows the rigs to drill efficiently in today's complex and challenging drilling environments. See Risk Factors on page 21.

Manufacturing Operations

TDM is a drilling rig and equipment construction and fabrication business which builds and maintains Trinidad's drilling rigs and related equipment.

MANUFACTURING

TDM designs, manufactures, refurbishes and recertifies land-based drilling rigs and related equipment with operations in Nisku, Alberta and Houston, Texas. TDM is able to construct drilling rigs and related equipment that are customized to meet the needs of Trinidad and its customers. In addition to constructing all, or outsourcing parts of the construction, TDM is able to rig-up the new equipment in their yards in North America or internationally, where they may be closer to the final delivery point. TDM has also designed and built its own in-house top drives for use on its equipment. Trinidad's operational focus has allowed it to identify industry trends early. TDM’s rig designs ensure that rigs are built to operate in a variety of plays and that they can easily and inexpensively be adapted and upgraded. For example, such rigs can be completely winterized for operating in cold climates, such as the WCSB, or can be equipped with cooling and filtration systems for use in warmer desert climates.

In 2015, TDM completed construction on two rigs for TDI-JV and one training rig for Halliburton. In addition, TDM completed construction on four rigs for Trinidad, one for our Canadian Operations and three for our US and International Operations. Manufacturing revenue related to third parties (TDI-JV and Halliburton) was approximately 8% of Trinidad’s consolidated revenue for 2015 and 9% of Trinidad’s consolidated revenue for 2014. Revenue for internal construction projects is eliminated on consolidation.

TDM manufactures rigs for other members of the Trinidad Group and at times its JV partner, Halliburton. TDM only agrees to build a new rig for internal purposes if Trinidad has a long-term contract committing the customer to a fixed dayrate and a fixed number of operating days. Before beginning construction, TDM estimates the cost of constructing the rig and the timeline for completing the construction. TDM reviews the cost of necessary components such as the price of steel; labour rates; and, to the extent that component parts must be sourced from other countries, exchange rates. Trinidad sources certain key rig components, raw materials, equipment and component parts from a variety of suppliers located in Canada, the US and overseas.

Given the weak industry conditions and limited demand for TDM’s services, in 2016, TDM was reorganized with TDM’s operations being significantly scaled down and the majority of its functions being performed from within the Canadian and US and International Operations.

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Corporate

Trinidad has a non-operating corporate segment, which acts as a support function to the other segments. In addition, the segment receives revenue due to the recovery of third party costs from TDI-JV.

Revenue for the corporate segment was approximately 0.2% of Trinidad’s total consolidated revenue for 2015 and 0.2% for 2014.

Other Operational Information

MARKET FOR SERVICE AND ECONOMIC DEPENDENCE

The amount of capital allocated by oil and gas exploration and production companies for reserve development has a direct impact on the demand for drilling rigs and this demand will impact the rig utilizations and dayrates that can be charged. The total capital available is influenced by commodity prices and the ability to finance capital programs with either cash flow, debt or new equity issues. These market forces, in combination with consumer demand for oil and gas, are key factors in determining the number of wells that will be drilled by oil and gas exploration and production companies.

Drilling services are provided based on standard drilling contracts. The contracts outline the rights, responsibilities and obligations of each party to the contract. The contracts can be for a specific well, a series of wells, or for a specific time frame. Our long-term, take-or-pay contracts specify a minimum number of days that the customer agrees the rigs will operate (typically ranging from one to five years), whereas the spot contracts generally do not provide for a guaranteed level of utilization. Both long-term, take-or-pay contracts and spot contracts provide for daily rates to the customer and outline responsibilities with respect to third-party charges.

In order to provide additional stability to our revenue stream, part of Trinidad's strategy has been to back up the construction of new rigs and ongoing utilization of existing rigs with long-term, take-or-pay contracts that guarantee a specific level of utilization and dayrates during the term of the contract. These contracts have cancellation clauses that require the operator to pay clearly defined fees if a contract is cancelled prior to its expiry. At December 31, 2015, we had approximately 30% of our fleet covered with this style of contract, as compared to December 31, 2014 when we had 45% of our fleet under long-term, take-or-pay contracts.

The market for the drilling services we provide is comprised of numerous oil and gas exploration companies, and as such we do not have any customers upon which its business is substantially dependent. For the year ended 2015, we had no customers that provided a percentage of total revenue greater than 10%.

CYCLES

We operate a substantial number of rigs in western Canada, and therefore, operations are heavily dependent upon the seasons. The winter season is typically a busy period as oil and natural 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. Spring time normally encompasses a slow period referred to as spring break-up. During this period, melting conditions result in temporary municipal road bans that

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effectively prohibit the movement of drilling rigs. The remainder of the year is usually representative of average activity levels.

Industry conditions have an effect on how seasonality affects Trinidad’s activity. As well, Trinidad’s expansion into the US and international markets 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 and international areas, 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 year.

HEALTH, SAFETY AND ENVIRONMENT (HSE)

We are committed to providing industry leading operational performance, while protecting employees from harm, conserving the environment in which we operate, and protecting assets and the wellbeing of the community at large. Trinidad ensures all health, safety and environmental aspects and impacts are identified, mitigated and controlled to a level as low as reasonably practicable.

In order to best manage and drive strong HSE performance, our management team includes an overall HSE Vice President and two geographic HSE General Managers with functional leadership and oversight of HSE matters. One of our GMs has responsibility for Canadian Operations and the other GM is responsible for both US and International Operations. The HSE VP and GMs have ongoing communication and interaction with operations management and staff, while also maintaining direct access to the President of Trinidad. These interactions help to ensure the HSE mandate remains operationally driven and supported at the highest levels of the organization.

Beyond the day-to-day line and functional HSE management, we have an HSE Leadership Committee comprised of senior leadership which regularly meets to focus on improving Trinidad’s health, safety and environmental performance. In addition, at the Board of Directors (Board) level, Trinidad has an HSE Committee which meets at least four times annually to review HSE performance, management and initiatives.

Continually improving the health and safety of rig crews is one of the most critical aspects of our operations. Throughout 2015, we continued our trend of maintaining a lower than industry frequency of safety incidents (our Total Recordable Injury Frequency). Moving forward, we will continue to relentlessly and proactively track, analyze and trend incident and operational data to ensure programs remain current and effective for eliminating or reducing operational risks and proactively preventing incidents.

Our high specification, modern and well-maintained fleet provides a critical safeguard in ensuring efficient and safe operations through the reduction of human interaction and reliability in the course of operations. The design of the rig fleet itself provides a further level of environmental protection through rigorous and well-planned preventative maintenance programs that allows rig engines and hydraulic equipment to run at their optimum levels, minimizing air pollution and fluid leakage. In addition, we outfit some of our equipment with high-grade mufflers to reduce noise pollution, particularly where a rig may be operating near a highly populated area.

In order to reduce the sound and emissions from diesel engines and to lower costs for our customers, we utilize alternative power sources for rigs in some cases. Where

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available, we have the ability to provide power to our rigs through direct connection to high-line power; significantly lowering engine-related sound from the rig. We have also been investigating and investing in ways to use natural gas in place of diesel, taking advantage of the fact that natural gas is a cleaner burning fuel and has other price drivers. We have had a number of rigs operating on bi-fuel engines which run a mixture of natural gas and diesel, and have constructed one rig that has the ability to be operated on the natural gas produced from operations.

MANAGEMENT AND EMPLOYEES

The contract drilling business is organized into profit centres for each rig. Each rig manager is responsible for daily operational management of his individual rig and reports to the appropriate field superintendents, each managing a group of rigs. Marketing efforts are coordinated with the operational managers and are performed by our sales and marketing group located in Calgary, Alberta for the Canadian fleet and Houston, Texas for the US and international fleet.

TDM is managed by a group of foremen who are responsible for ensuring quality standards and coordinating the construction efforts. Each of these foremen reports directly to the Production Manager who in turn reports to the General Manager. The General Manager, together with the Senior Vice President, oversees the entire production process and coordinate between engineering, purchasing, production and finance. Given the weak industry conditions and limited demand for TDM’s services, in 2016, TDM was reorganized with TDM’s operations being significantly scaled down and the majority of its functions being performed from within the Canadian and US and International Operations.

In addition to reorganizing TDM, we lowered our overall number of employees throughout 2015 and again in early 2016. As rigs become idle, crew members are not paid until future work can be found for their rig. In addition, we lowered our headcount in our corporate, field administration and manufacturing divisions in order to further lower costs.

Trinidad Personnel 1-Mar-16 31-Dec-15 31-Dec-14

Canadian Operations 563 593 1,260

US and International Operations 544 670 1,384

Joint Venture Operations 492 527 419

Total 1,599 1,790 3,063

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Risk Factors

Prospective investors should carefully consider the following risk factors together with the other information contained in this Annual Information Form and in Trinidad's other reports on file with the Canadian securities regulatory authorities before investing in Trinidad Shares.

CRUDE OIL AND NATURAL GAS PRICES

Fluctuations and uncertainty surrounding the future prices of commodities could lead to changes in demand for oil and natural gas, and may impact the economics of planned drilling projects and ongoing production projects, resulting in the curtailment, reduction, delay or postponement of such projects for an indeterminate period of time. Commodity prices affect the capital programs of Trinidad’s customers. More specifically, the price they receive for their production has a direct impact on the cash flow available to them and the subsequent demand for oilfield services provided by Trinidad. A prolonged period of lower oil and natural gas prices could result in a decline in demand and dayrates. High volatility in crude oil and natural gas prices may also impact our customers’ capital programs, causing delays in spending and lower overall demand for oilfield services.

INDUSTRY RISKS

As a provider of contract land drilling services, Trinidad's business depends on the level of exploration and production activity by oil and gas companies operating in the geographic markets where we operate. The oil and gas exploration and production industry is a historically cyclical industry characterized by significant changes in the levels of exploration and development activities.

Depending on the market prices of oil and gas, oil and gas exploration and production companies may cancel or curtail their drilling programs and may lower production spending on existing wells, thereby reducing demand for Trinidad's services. Oil and gas prices have been volatile historically and we expect that they will continue to be so in the future. Further, Trinidad's success will depend on the ability of oil and gas exploration and production companies to select and acquire suitable producing properties or undeveloped exploration prospects.

Many factors beyond Trinidad and its customers' control affect oil and gas prices and the economics for Trinidad's customers, including:

− the cost of exploring for, producing and delivering oil and gas;

− the discovery rate of new oil and gas reserves;

− the rate of decline of existing and new oil and gas reserves;

− available pipeline and other oil and gas transportation capacity;

− the levels of oil and gas storage;

− the ability of oil and gas companies to raise capital;

− economic conditions;

− actions by the Organization of Petroleum Exporting Countries (OPEC);

− political instability in other major oil and gas producing regions;

− war, terrorist threats, civil insurrection and other political events;

− governmental regulations, both domestic and foreign;

− domestic and foreign tax policies;

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− weather conditions;

− the pace adopted by foreign governments for the exploration, development and

production of their national resources;

− the price of foreign imports of oil and gas; and

− the overall supply and demand for oil and gas.

The effect of these factors cannot be accurately predicted.

OPERATING HAZARDS

Trinidad's operations are subject to the numerous hazards inherent to the drilling process and industry, including but not limited to:

− hydrocarbon influx or kicks, loss of well control and/or potentially well blow-outs;

− cratering;

− fires or explosions;

− collapse of the borehole;

− damaged or lost drilling equipment;

− damage, interruption of service or loss from natural disasters or geopolitical

unrest; and

− dropped objects.

Trinidad's insurance policies and contractual rights to indemnity may not adequately cover losses; and therefore, the Company may not have adequate insurance coverage or rights to indemnity for all risks. Pollution and environmental risks generally are not fully insurable. Depending on competitive conditions and other factors, Trinidad attempts to obtain contractual protection against uninsured operating risks from its customers. However, customers who provide contractual indemnification protection may not in all cases maintain adequate insurance or otherwise have the financial resources necessary to support their indemnification obligations. Trinidad's insurance or indemnification arrangements may not adequately protect it against liability or loss from all the hazards of its operations. The occurrence of a significant event that has not been fully insured or indemnified against or the failure of a customer to meet its indemnification obligations to the Company could materially and adversely affect the results of operations and financial condition. Furthermore, the Company may be unable to maintain adequate insurance in the future at rates it considers commercially reasonable.

UNCERTAIN OR NEGATIVE GLOBAL ECONOMIC CONDITIONS

The uncertainty and volatility surrounding the financial markets globally could have adverse effects on Trinidad's industry and its business, including Trinidad's future operating results and the ability to recover Trinidad's assets, at their stated values. Additionally, a volatile financial market could lead to the inability of Trinidad's customers to pay suppliers, including Trinidad, in the event they are unable to access the capital markets to fund their business operations. Likewise, Trinidad's suppliers may be unable to sustain their current level of operations, fulfill their commitments and/or fund future operations and obligations. If any of the foregoing were to occur, it could have a material adverse effect on Trinidad's business and financial results.

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ACCESS TO CAPITAL

Trinidad's capacity to meet future capital requirements may depend upon its ability to access capital. The ability to do so may be limited by, among other factors, the overall state of capital markets and investor demand for investments in Trinidad's industry. Sources of funding for Trinidad's future capital requirements may include any or all of the following:

− cash on hand;

− cash generated from operations;

− public offering or private placements of equity and debt securities;

− commercial bank loans;

− capital leases; and

− sale of assets.

To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the ability of Trinidad to make capital investments and maintain existing assets may be impaired and operations may be materially and adversely affected as a result, and may affect Trinidad's ability to carry out its business strategy.

LONG-TERM CONTRACTS

Trinidad has land drilling rigs under long-term, take-or-pay contracts. Although Trinidad is confident that these contracts are legally enforceable, there is risk that our customers may not honour their take-or-pay contracts, which could materially reduce the Company's revenue and profitability, and have a negative adverse effect on its results of operations. Weak market conditions could increase the number of customers terminating their long-term contracts early. Further, while most of our take-or-pay contracts require that an early termination payment be made to Trinidad if such contract is terminated prior to expiration, such payment may not fully compensate Trinidad for the loss of such contract. There is a risk that long-term contracts could be cancelled by customers, without early termination payments, if Trinidad follows unsafe or unacceptable operating practices.

Additionally, all new rig builds are done at a customer request and to customer specifications, and are supported by long-term, take-or-pay contracts, typically with terms of three to five years, and 200 to 365 day minimum requirements. Often these rig builds are customized to the particular customer’s well locations, and operating preferences. There is a risk that when the rig build is complete the customer may not honour their take-or-pay contracts, which could materially impact our operating results, as well as impact cash flows as Trinidad may have to incur significant costs to make further modifications to the rig so that it can go to work for another customer. In addition, weak market conditions could limit Trinidad’s ability to sign long-term contracts and the number of rigs under this style of contract may decrease.

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SKILLED LABOUR

Trinidad requires skilled personnel to operate and provide technical services to, and support for, its rigs. In periods of increasing activity or when the number of rigs in Trinidad's areas of operation increases, either because of new construction, re-activation of idle units or the mobilization of rigs into the region, shortages of qualified personnel could arise, creating upward pressure on wages and difficulty in staffing. The shortages of qualified personnel or the inability to obtain and retain qualified personnel also could negatively affect the quality and timeliness of the Company's work. In addition, Trinidad's ability to expand operations depends in part upon our ability to increase the size of our skilled labour force.

COMPETITION

Competition could adversely affect Trinidad's performance as Trinidad's primary market areas are highly fragmented and competitive. The fact that rigs are mobile and can be moved from one market to another in response to market conditions heightens the competition in the industry and may result in an oversupply of rigs in an area. Land drilling companies and other oilfield service companies compete primarily on a regional basis, and the intensity of competition may vary significantly from region to region at any particular time. If demand for drilling or production services improves in a region where Trinidad operates, competitors might respond by moving in suitable rigs from other regions. An influx of rigs from other regions could rapidly intensify competition, reduce profitability and make any improvement in demand for drilling or production services short-lived.

Lowering commodity prices may make customers more price sensitive and Trinidad’s competitors may choose to offer their services at lower prices, causing Trinidad to lower its pricing in order to compete.

Most drilling services contracts are awarded on the basis of competitive bids, which also results in price competition. In addition to pricing and rig availability, Trinidad believes the following factors are also important in determining which drilling services provider to select:

− the capability and condition of each of the competing drilling rigs;

− the mobility and efficiency of the rigs;

− the quality of service and experience of the rig crews;

− the safety records of the rigs and the company;

− the offering of ancillary services; and

− the ability to provide drilling and production equipment adaptable to, and

personnel familiar with, new technologies and drilling and production techniques.

While Trinidad must be competitive in its pricing, our competitive strategy generally emphasizes the quality and technological advancements of our equipment, the safety record of our rigs, the ability to offer ancillary services and the quality of service and experience of the rig crews to differentiate Trinidad from its competitors. Trinidad competes directly with other companies that have greater financial resources, and access to capital which could allow them to compete more effectively.

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DEBT SERVICE

Trinidad has secured credit facilities. Variations in interest rates and principal repayments, under the terms of the agreements, could result in significant changes in the amount required to be applied to debt service before payment of any amounts by Trinidad. Although management's view is that Trinidad's current credit facilities are sufficient, there can be no assurance that they will be adequate for the future financial obligations of Trinidad or that additional funds can be obtained, if required.

Trinidad has a revolving credit facility which matures December 12, 2018, and is subject to annual extensions of an additional year on each anniversary date of the closing date upon the consent of the lenders holding two-thirds of the aggregate commitments under the credit facility. To the extent that the facility is not extended, the drawn down principal would be due on the maturity date. Interest payments are required quarterly and are based on the Canadian prime rate (for Canadian prime rate loans), the US base rate (for US base rate loans), the LIBOR rate (for LIBOR loans) and the US prime rate (for US prime rate loans) plus the applicable margin.

In addition, the Trinidad has Senior Notes of US$450 million which mature on January 15, 2019 and require semi-annual interest payments at an annual interest rate of 7.875%. The principal and interest payments owing under the credit facilities and Senior Notes rank in priority to any dividend payments made by Trinidad.

If Trinidad becomes unable to pay its debt service charges or otherwise defaults, the lenders will rank senior to the Trinidad Shareholders.

CAPITAL INVESTMENT

If Trinidad's cash flows and capital resources are insufficient to fund its debt service obligations, the Company may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital, or restructure or refinance its indebtedness.

LEVERAGE AND RESTRICTIVE COVENANTS

Trinidad has third party debt service obligations under its credit facilities. The degree to which Trinidad is leveraged could have important consequences to our shareholders, including:

(i) a portion of the consolidated cash flow from operations will be dedicated to

the payment of the principal and interest on its indebtedness, thereby

reducing cash available for dividend payments;

(ii) certain borrowings are at variable rates of interest, which exposes Trinidad to

the risk of increased interest rates.

Trinidad's ability to make scheduled payments of principal and interest on, or to refinance, its indebtedness will depend on its future operating performance and cash flow, which are subject to prevailing economic conditions, prevailing interest rate levels and financial, competitive, business and other factors, many of which are beyond its control.

Trinidad’s credit facilities contain certain customary operating covenants that limit the discretion of management to incur additional indebtedness, to create liens or other encumbrances, to pay dividends or make certain other payments, investments, loans and guarantees and to sell or otherwise dispose of assets and merge or consolidate with

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another entity. A failure to comply with the obligations in the agreements in respect of the credit facilities could result in an event of default which, if not cured or waived, could permit acceleration of the relevant indebtedness. If the indebtedness under the credit facilities were to be accelerated, there can be no assurance that Trinidad's assets would be sufficient to repay in full that indebtedness.

Trinidad’s Senior Notes have covenant limitations, including the following; incurring additional debt; investments, including advances to the TDI-JV; asset sales; and restricted payments. Restricted payments as allowed within a basket, calculated as accumulated net earnings from October 1, 2010 to current at 50% for net income or 100% for net loss, plus equity issued for cash and net fair market value of other restricted assets added for equity.

RIG CONSTRUCTION RISKS

TDM manufactures rigs for other members of the Trinidad Group and at times Trinidad’s joint venture partner, Halliburton. When a member of the Trinidad Group requests TDM to construct a rig, TDM estimates the cost of construction of the rig and the timeline for completing the construction. Actual costs of construction may; however, vary significantly from those estimated as a result of factors, including, without limitation, changes in input costs such as the price of steel; variations in labour rates; and, to the extent that component parts must be sourced from other countries, fluctuations in exchange rates. In addition, several factors could cause delays in the construction of a rig, including, and without limitation, shortages in skilled labour and delays or shortages in the supply of component parts. TDM sources certain key rig components, raw materials, equipment and component parts from a variety of suppliers located in Canada, the US and overseas. While alternate suppliers exist for most of these components, materials, equipment, parts and services, Trinidad may experience cost increases, delays in delivery due to high activity or other unforeseen circumstances. Construction delays may lead to postponements of the anticipated date for deployment of the newly constructed rig into operation and any such postponement could have a negative effect on cash flows generated from operations, of which the effect may be material.

ENVIRONMENTAL CLAIMS AND LIABILITY

There is growing concern about the apparent connection between the burning of fossil fuels and climate change. The issue of energy and the environment has created intense public debate in Canada, the US and around the world in recent years that is likely to continue for the foreseeable future and could potentially have a significant impact on all aspects of the economy including the demand for hydrocarbons and resulting in lower demand for Trinidad's services.

Trinidad's operations are subject to numerous laws, regulations and guidelines governing the management, transportation and disposal of hazardous substances and other waste materials and otherwise relating to the protection of the environment and health and safety. These laws, regulations and guidelines include those relating to spills, releases, emissions and discharges of hazardous substances or other waste materials into the environment, requiring removal or remediation of pollutants or contaminants and imposing civil and criminal penalties for violations. Some of the laws, regulations and guidelines that apply to Trinidad's operations also authorize the recovery of natural resource damages by the government, injunctive relief, and the imposition of stop,

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control, remediation and abandonment orders. The costs arising from compliance with such laws, regulations and guidelines may be material to Trinidad.

The trend in environmental regulation has been to impose more restrictions and limitations on activities that may impact the environment, including the generation and disposal of wastes and the use and handling of chemical substances. These restrictions and limitations have increased operating costs for both Trinidad and its customers. Any regulatory changes that impose additional environmental restrictions or requirements on Trinidad or its customers could adversely affect Trinidad through increased operating costs and potential decreased demand for Trinidad's services.

While Trinidad maintains liability insurance, including insurance for environmental claims, the insurance is subject to coverage limits and certain insurance policies exclude coverage for damages resulting from environmental contamination. There can be no assurance that insurance will continue to be available to Trinidad on commercially reasonable terms, that the possible types of liabilities that may be incurred by Trinidad will be covered by Trinidad's insurance, or that the dollar amount of such liabilities will not exceed Trinidad's policy limits. Even a partially uninsured claim, if successful and of sufficient magnitude, could have a material adverse effect on Trinidad's business, results of operations, prospects and funds available for dividends.

REGULATION OF INDUSTRY

Trinidad's activities are subject to complex and stringent energy, environmental and other governmental controls, laws and regulations. While management believes that the Company's businesses will continue to be operated in accordance with applicable laws, Trinidad will remain subject to a varied and complex body of laws and regulations that both public officials and private individuals may seek to enforce. Existing laws and regulations may be revised or new laws and regulations may become applicable to Trinidad and each may have a negative effect on Trinidad's businesses and the cost and results of operations.

BUSINESS GROWTH

Growth in the oil and gas drilling industry is impacted by the availability and capacity of contractors to build drilling rigs. Trinidad has mitigated this risk through its manufacturing expertise which allows Trinidad to design, manufacture and refurbish drilling rigs and related equipment. There is no guarantee that Trinidad will be able to add additional rigs to its fleet, maintain or repair the rigs currently in its fleet, or be able to develop additional business lines.

Trinidad may experience growth through acquisitions. The Company's continued profitability and growth will depend on its ability to successfully integrate any acquisitions. Failure to do so could have a material adverse effect on its business, operations, results and prospects.

DEPENDENCE ON MAJOR CUSTOMERS

Trinidad has a large customer base, and does not rely on any single customer. For the year ended December 31, 2015, Trinidad had no customers that provided a percentage of total revenue greater than 10%. While Trinidad is satisfied with its relationships with its existing customers, the loss of any one or more of these customers, or a significant reduction in business done with Trinidad by one or more of these customers, if not offset

About Our Business


28

by obtaining new customers, or expanding business with other existing customers, could have a material adverse effect on Trinidad's businesses, results of operations, and prospects.

SEASONALITY/WEATHER

The activities in the Canadian and northern part of the US oilfield services industry are subject to a degree of seasonality. Operating activities in these areas are generally lower in March through May, during spring break-up, and tend to increase in the fall and peak in the winter months of December through March. Additionally, volatility in the weather and temperature may lead to an earlier than expected spring break-up which can impact Trinidad's operating performance and results from operations. Trinidad's expansion into the southern US and international markets has reduced overall exposure to the seasonal conditions present in Canada and the northern US, and correspondingly, has allowed Trinidad to partially mitigate the overall impact of seasonality.

JOINT VENTURE RISK

Actions of and disputes with Trinidad's joint venture partners could have a material adverse effect on the business and results of operations of its joint ventures and, in turn, its business and consolidated results of operations of Trinidad including TDI-JV’s ability to pay dividends or distributions. Trinidad’s joint venture partners have significant legal and operational rights in TDI-JV and DCM-JV. As with any joint venture arrangement, differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major issues. Trinidad also cannot control the actions of its joint venture partners, including any non-performance, default, or bankruptcy. These factors could have a material adverse effect on the business and results of operations of Trinidad’s joint ventures and, in turn, Trinidad's business and consolidated results of operations.

FOREIGN OPERATIONS

Trinidad's operations are subject to political and economic instability, risk of government actions and cyber-attacks that could have a material adverse effect on its business, consolidated results of operations, and consolidated financial condition. Trinidad is exposed to risks inherent in doing business in each of the countries in which it operates either directly or through its Joint Venture Operations. Trinidad's operations are subject to various risks unique to each country that could have a material adverse effect on its business, consolidated results of operations, and consolidated financial condition. With respect to any particular country, these risks may include:

− political and economic instability, including:

civil unrest, acts of terrorism, force majeure, war, or other armed conflict;

inflation; or

currency fluctuations, devaluations, and conversion restrictions: or

− governmental actions that may:

result in expropriation and nationalization of Trinidad’s assets in that country;

result in confiscatory taxation or other adverse tax policies;

limit or disrupt markets, restrict payments, or limit the movement of funds;

result in the deprivation of contract rights; or

result in the inability to obtain or retain licenses required for operation.

About Our Business


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For example, due to the unsettled political conditions in many oil-producing countries, Trinidad's operations, revenue, and profits are subject to the adverse consequences of war, the effects of terrorism, civil unrest, strikes, currency controls, and governmental actions. These and other risks described above could result in the loss of Trinidad's personnel or assets, cause Trinidad to evacuate its personnel from certain countries, cause it to increase spending on security worldwide, disrupt financial and commercial markets, including the supply of and pricing for oil and natural gas, and generate greater political and economic instability in some of the geographic areas in which it operates. Areas where Trinidad operates that have significant risk include, but are not limited to: the Middle East, including Saudi Arabia, and Mexico. In addition, any possible reprisals as a consequence of military or other action, such as acts of terrorism in the US or elsewhere, could have a material adverse effect on Trinidad's business, consolidated results of operations, and consolidated financial condition.

RELIANCE ON MANAGEMENT

Trinidad Shareholders are dependent on management and the Board in respect of the oversight, administration and management of all matters relating to Trinidad and its operations and administration. The loss of key individuals could have a detrimental effect on Trinidad. Trinidad believes that its future success will also depend in large part on its ability to attract, retain and further motivate highly skilled management, marketing, sales and operating personnel. Trinidad may experience intense competition for personnel and cannot assure investors that it will be able to retain key employees or that it will be successful in attracting, assimilating and retaining personnel in the future.

CONFLICTS OF INTEREST

Members of the Board are engaged, and will continue to be engaged, in certain business interests on their own behalf and on behalf of other companies. Situations may arise where the directors and officers may be in direct competition with Trinidad. Conflicts of interest, if any, which arise, will be subject to, and governed by, Trinidad's internal code of conduct and by the procedures prescribed by the ABCA.

STRUCTURAL SUBORDINATION OF THE TRINIDAD SHARES

In the event of a bankruptcy, liquidation or reorganization of Trinidad, holders of certain of its indebtedness and certain trade creditors will generally be entitled to payment of their claims from the assets of Trinidad before any assets are made available for distribution. The Trinidad Shares will be effectively subordinated to most of the indebtedness and other liabilities of Trinidad.

DIVIDENDS

Any decision to pay dividends on the Trinidad Shares will be made by the Board on the basis of Trinidad's earnings, financial requirements and other conditions existing at such time. There can be no assurance that Trinidad will pay dividends in the future.

DILUTION

Trinidad may make future acquisitions or enter into financings or other transactions involving the issuance of securities of Trinidad which may be dilutive.

About Our Business


30

Dividend Policy Trinidad does not have a formal policy respecting dividends or distributions. Any decision to pay dividends on the Trinidad Shares will be made by the Board on the basis of Trinidad's earnings, financial requirements and other conditions existing at such time.

Trinidad paid or declared payable the following dividends to the Trinidad Shareholders over the three most recently completed financial years:

DIVIDEND PER TRINIDAD COMMON SHARE

For the Quarter Ending 2015 2014 2013

March 31 $0.05 $0.05 $0.05

June 30 $0.05 $0.05 $0.05

September 30 $0.05 $0.05 $0.05

December 31 $0.01 $0.05 $0.05

On March 1, 2016, Trinidad suspended its dividend in order to manage cash flows and flexibility in light of weak market conditions and limited future visibility.

General Description of Capital Structure


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GENERAL DESCRIPTION OF CAPITAL STRUCTURE

Common Shares

Trinidad is authorized to issue an unlimited number of Trinidad Shares. Trinidad Shareholders are entitled:

a) to one vote per Trinidad Share at all meetings of Trinidad Shareholders, except

meetings at which only holders of a specified class of shares are entitled to vote;

b) subject to the rights, privileges, restrictions and conditions attaching to any other

class or series of shares of Trinidad, to receive any dividend declared on the

Trinidad Shares declares by the Board; and

c) subject to the rights, privileges, restrictions and conditions attaching to any other

class or series of shares of Trinidad, to receive pro rata the remaining property of

Trinidad upon dissolution.

Trinidad has a Shareholder Rights Plan (the Plan) that was adopted to ensure, to the extent possible and among other things, that all Trinidad Shareholders are treated fairly in connection with any take-over bid for Trinidad. The Plan creates a right that attaches to each present and subsequently issued Trinidad Share. Until the Separation Time (as defined in the Plan), which typically occurs at the time of an unsolicited take-over bid, whereby a person acquires or attempts to acquire 20 percent or more of the Trinidad Shares, the rights are not separable from the Trinidad Shares, are not exercisable and no separate rights certificates are issued. Each right entitles the holder, other than the 20 percent acquirer, from and after the Separation Time and before certain expiration times, to acquire one Trinidad Share at a substantial discount to the market price at the time of exercise. The Trinidad Board of Directors may waive the application of the Plan in certain circumstances. The Plan was reconfirmed at Trinidad's 2014 meeting of Trinidad Shareholders and must be reconfirmed at every third annual meeting thereafter. Accordingly, the Plan, with such amendments as the Trinidad Board of Directors determines to be necessary or advisable, particularly in light of the pending amendments to the Canadian take-over bid regime recently announced by the Canadian Securities Administrators, and as may otherwise be required by law, is expected to be placed before Shareholders for approval at Trinidad's 2017 annual meeting. A copy of the agreement relating to the current Plan and a copy of the amendment thereto relating to the change in rights agent have been filed on Trinidad's SEDAR profile at www.sedar.com on May 9, 2014 and January 11, 2016, respectively.

Preferred Shares

Trinidad is authorized to issue an unlimited number of preferred shares. The preferred shares may be issued in one or more series with such rights, restrictions, privileges, conditions and designations attached thereto as may be determined by the Board prior to the issuance thereof. With respect to the payment of dividends and distribution of assets in the event of the liquidation, dissolution or winding-up of Trinidad, whether voluntary or involuntary, the preferred shares shall be entitled to preference over the Trinidad Shares and any other shares ranking junior to the preferred shares to the extent fixed in the case of each respective series and may also be given such other preferences over the Trinidad Shares and any other shares ranking junior to the preferred shares as may be determined at the time of creation of such series.



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Credit Facility

On December 16, 2010, Trinidad entered into a credit facility agreement in connection with the issuance of the Senior Notes whereby it was provided with a $200 million Canadian revolving facility and a $100 million US revolving facility. Included in these amounts are a $10 million bank overdraft facility and a US$10 million bank overdraft facility.

On December 12, 2014, Trinidad terminated its 2010 credit facility and entered into a new agreement, including additional commitments under the US dollar denominated revolving facility. The new credit facility included a Canadian revolving facility of C$200 million and a US revolving facility of US$200 million.

On December 11, 2015, Trinidad amended its credit facility, reducing the size of the facility. The new credit facility includes a Canadian revolving facility of C$150 million and a US revolving facility of US$150 million and matures in December 2018.

The Company's credit facility requires quarterly interest payments based on the Canadian prime rate (for Canadian prime rate loans), the US base rate (for US base rate loans), the LIBOR rate (for LIBOR loans) and the US prime rate (for US prime rate loans) plus the applicable margin. It incorporates a tiered interest rate which varies depending on the results of a financial ratio defined as the total debt (which includes the Senior Debt,

Senior Notes Payable and dividends payable ) less unrestricted cash in excess of $10m, divided by Bank EBITDA (calculated as net earnings before interest, taxes, depreciation and amortization, plus impairment expense, loss (gain) on sale of property and equipment, loss (gain) from investment in joint ventures, share-based payment expense and unrealized foreign exchange) for a trailing twelve month period.

The credit facility matures December 12, 2018, and is subject to annual extensions of an additional year on each anniversary date upon consent of the lenders holding two-thirds of the aggregate commitments under the credit facility. The members of the syndicated groups include major Canadian, US, and international financial institutions. The debt is guaranteed by certain of the subsidiaries of Trinidad and secured by general security agreements executed by Trinidad and such subsidiaries granting a security interest in all of the present and after acquired real and personal property of Trinidad and such subsidiaries. The credit agreement also contains restrictive covenants which are common for transactions of this type including limitations on incurring non-permitted debt and the sale of Trinidad's assets. Certain of these covenants were relaxed in December of 2015 to provide additional financial flexibility over the following two years.

Senior Notes

The following is a summary of certain characteristics of the Senior Notes. For a complete description of the Senior Notes and the rights associated therewith, reference should be made to the full text of the Note Indenture, which is available under Trinidad's profile on SEDAR at www.sedar.com.

On December 16, 2010, Trinidad issued US$450 million of 7.875% senior unsecured notes for gross proceeds of US$446.7 million. The Canadian dollar equivalency on this date was $449.1 million. Interest on the Senior Notes accrues at a rate of 7.875% per annum, is payable semi-annually in arrears on January 15 and July 15 of each year and commenced on July 15, 2011. Interest is computed on the basis of a 360 day year consisting of twelve



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30 day months. The Senior Notes mature on January 15, 2019. The Senior Notes are general unsecured obligations of Trinidad guaranteed by certain of its subsidiaries.

On and after January 15, 2015, Trinidad is entitled to redeem all or a part of the Senior Notes, upon not less than 30 or more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest:

Year 2015

2015 103.938%

2016 101.969%

2017 and thereafter 100.000%

Prior to January 15, 2015, Trinidad had certain rights regarding early redemption of the Senior Notes; however, due to early redemption penalties, the Company chose not to exercise these rights.

The Note Indenture also contains provisions which allow for the transfer and exchange of the Senior Notes and the beneficial interests held therein. Holders are required to pay all taxes due on transfer. The Company is not required to transfer or exchange any Senior Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

There are other covenant limitations in the Note Indenture, including the following: incurring additional debt; investments, including advances to the TDI-JV; asset sales; and restricted payments. Restricted payments as allowed within a basket, calculated as accumulated net earnings from October 1, 2010 to current at 50% for net income or 100% for net loss, plus equity issued for cash and net fair market value of other restricted assets added for equity.

Other Debt

On August 11, 2015, Trinidad assumed additional debt under the Canadian partnerships related to the CanElson Acquisition which included two non-revolving loans and two operating loans. Borrowings on the operating loans are the lesser of $1.0 million or 75% of partnership’s Canadian accounts receivable aged less than 90 days. The operating loans bear interest when funds are drawn at the bank’s prime lending rate plus 1.5% and is due on demand. The non-revolving loans bears interest when funds are drawn at the bank’s prime lending rate plus 2%. For the period commencing December 31, 2015 and ending on September 30, 2016, all financial covenants have been suspended under the requirement that $0.3 million be paid and applied to the indebtedness. Interest on the non-revolving loans shall continue to accrue at prime lending rate plus 3% per annum, calculated and payable monthly until and including September 30, 2016.

Credit Ratings

Trinidad has received the following credit ratings from Moody’s Investor Services (Moody’s) and Standard & Poor’s Rating Services (S&P) in 2015 with respect to its outstanding obligations:



34

As of December 31, 2015 Moody’s S&P

Corporate Family Rating /Corporate Credit Rating Ba3 BB

Senior Unsecured Credit Rating (7⅞ % Senior Notes) B1 BB

In March of 2016, Moody’s completed an assessment of the Energy – Global sector and our peer group. Along with several of our peers, Moody’s downgraded Trinidad.

As of March 3, 2016 Moody’s S&P

Corporate Family Rating /Corporate Credit Rating B3

(negative outlook) BB

Senior Unsecured Credit Rating (7⅞ % Senior Notes) Caa1 BB

Moody's credit ratings are an opinion of the relative credit risk of a financial obligation, reflecting both the likelihood of default and any financial loss suffered in the event of a default. Moody's Corporate Family Ratings are an opinion of a corporate family's ability to honour all of its financial obligations. The ratings are on a scale ranging from Aaa to C, which represents the range from highest to lowest quality of securities rated. A numerical modifier of 1, 2, or 3 appended to each rating indicates the relative standing within a particular rating category, with 1 ranking at the higher end of the category and 3 at the lower end. A rating of B is the sixth highest of nine categories, indicating that the financial obligations are considered speculative and are subject to high credit risk. Moody's ratings for Trinidad took into consideration various risks and factors including the quality of the Company's rig fleet, contracts, earnings, cash flow, leverage, customer concentration, and exposure to the highly cyclical North American drilling market. Moody’s reported that the downgrade was due to the anticipated decline in our cash flow in 2016 and 2017, resulting from the decline of industry activity and rising debt to cash flow expectations.

S&P's credit ratings are a forward looking opinion on the general creditworthiness of an obligor, or the creditworthiness of an obligor with respect to a financial obligation. The credit ratings are on a scale ranging from AAA to D, which represents the range from highest to lowest quality of securities rated. A plus (+) or minus (-) appended to a rating indicates the relative standing within a particular rating category. A credit rating of BB is the fifth highest of ten categories. Obligors rated BB, B, CCC, CC and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. An obligor rated BB is less vulnerable to non-payment than other speculative issues; however, it faces major ongoing uncertainties and exposure to adverse business, financial or economic conditions. S&P's credit rating for Trinidad took into consideration various risks and factors including the Company's strong fleet quality, long-term contracts, improved financial measures, customer concentration, high level of industry competition, the high degree of demand cyclicality and price volatility inherent in the market for drilling services, and the level of debt relative to the size of the total Company.

The credit ratings assigned by the rating agencies are opinions about relative credit risk. They are not recommendations to purchase, hold or sell the debt, nor are the ratings



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indications of market price or of the market liquidity of the debt. There is no assurance that any rating will remain in effect for any given period, and such ratings may be subject to revision or withdrawal at any time by the rating organization.

The Company paid fees to each of Moody's and S&P for the credit ratings rendered as noted above. Other than annual monitoring fees for the Company and its rated securities, no additional payments were made to Moody's or S&P in respect of any other services provided to us during the past two years.

Market for Securities

The Trinidad Shares are listed on the TSX and trade under the symbol ‘TDG’. The following table sets forth the monthly high and low trading prices as well as the volume of the Trinidad Shares for each month indicated for the fiscal year ended December 31, 2015 as reported by FactSet:

Trinidad Shares (TDG) Close ($) High ($) Low ($) Volume

2015

January 4.27 5.58 3.92 15,867,537

February 4.36 5.23 4.08 17,879,212

March 4.07 4.66 3.82 14,617,894

April 5.07 5.53 4.05 11,861,244

May 4.57 5.53 4.50 9,731,864

June 4.04 4.79 3.95 15,428,640

July 3.25 4.08 3.06 6,924,961

August 2.76 3.42 1.97 16,475,208

September 2.21 3.11 2.12 19,967,352

October 2.27 3.02 2.20 11,885,162

November 2.07 2.50 1.90 11,082,558

December 2.12 2.23 1.79 16,722,234 Source: FactSet.

Directors and Officers


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DIRECTORS AND OFFICERS

Directors of Trinidad

The directors of Trinidad are nominated by the Trinidad Shareholders at each annual meeting of Trinidad Shareholders. All directors serve until the next annual meeting or until a successor is elected or appointed.

The 2015 directors are listed below:

Name and Municipality of Residence

Position / Member of Committee at December 31, 2015

Director Since Principal Occupation during Past Five Years

Michael Heier Cochrane, Alberta, Canada

Chair of the Board HSE Committee

June 1998 Independent businessman since 2016. Prior to that, President and Chief Executive Officer and a director of Millennium Stimulation Services Ltd., a private oilfield services company specializing in coiled-tubing fracturing stimulation services. Prior to the commencement of Millennium, from 2007 to 2011, Mr. Heier was co-founder and Chairman of the Board for Alter NRG Corp., a company that provided and pursued alternative clean and renewable energy solutions through plasma gasification.

Jim Brown Calgary, Alberta, Canada

Director Audit Committee Compensation Committee Governance Committee

June 2011 Independent businessman since 2009.

Brian Burden Calgary, Alberta, Canada

Director Audit Committee Compensation Committee Governance Committee

September 2013 Independent businessman since 2010.

David Halford Calgary, Alberta, Canada

Director Audit Committee HSE Committee

September 2013 Independent businessman since 2015, prior to that, the Executive Vice-President, Finance & Planning, Chief Financial Officer and Chief Risk Officer of ENMAX Corporation from 2009 to 2015.

Dale Johnson 1 Invermere, BC, Canada

Director Audit Committee Governance Committee

August 2015 Independent businessman since 2013, previously 2007 through 2013, Chairman of Optimal Payments PLC (AIM of the LSE); Chairman of Slyce Inc. (TSX-V); Chairman of Yogogo Inc. (TSX-V); Director of Upthecast (TSX).

Elson McDougald 1 Didsbury, Alberta, Canada

Director HSE Committee

August 2015 Independent businessman since 2015, previously with CanElson Drilling as Executive Chairman from 2010 to 2015, and Chief Executive Officer from 2008 to 2010.

Don Seaman 1 Calgary, Alberta, Canada

Director Compensation Committee

August 2015 President of D.R.S. Resource Investments Inc., a personal investment holding company.

Ken Stickland Calgary, Alberta, Canada

Lead Director Compensation Committee Governance Committee

September 2004 Independent businessman since early 2014; prior to that, Chief Business Development Officer at TransAlta Corporation (a public non-regulated power generation and wholesale marketing company).

Lyle Whitmarsh Cochrane, Alberta, Canada

Director / Chief Executive Officer HSE Committee

January 2008 Chief Executive Officer of Trinidad since 2012; prior thereto Chief Executive Officer and President of Trinidad from 2008 to 2012.

1. Mr. Johnson, Mr. McDougald and Mr. Seaman were appointed in connection with the CanElson Acquisition and resigned from the Board effective March 1, 2016.



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Officers of Trinidad

The name, place of residence, position held and principal occupation for the past five years for each officer of Trinidad are set out below:

Name and Municipality of Residence

Office Principal Occupation during Past Five Years

Lyle Whitmarsh Cochrane, Alberta, Canada

Chief Executive Officer Chief Executive Officer of Trinidad since 2012; Chief Executive Officer and President of Trinidad from 2008 to 2012.

Lesley Bolster Calgary, Alberta Canada

Chief Financial Officer Chief Financial Officer of Trinidad since January 2012; Vice President, Finance and Treasurer of Trinidad from March 2011 to January 2012; prior thereto Corporate Controller of Trinidad from January 2009 to February 2011.

Scott W.N. Clarke Calgary, Alberta Canada

Corporate Secretary Partner of law firm Blake, Cassels & Graydon LLP, Barristers & Solicitors since January 2005.

Brent Conway Calgary, Alberta, Canada

President President of Trinidad since January 2012; Chief Financial Officer and Executive Vice President of Trinidad from January 2008 to January 2012.

Randy Hawkings Calgary, Alberta, Canada

Executive Vice President, Canadian and Mexico Operations

Executive Vice President, Canadian and Mexico Operations since August 2015. President and Chief Executive Officer from January 1, 2011 of CanElson and Principal Engineer of Enercon International Inc. Prior thereto, President of CanElson from December 2008.

Adrian Lachance Red Deer, Alberta Canada

Chief Operating Officer, US and International Operations

Chief Operating Officer, US and International Operations since September 2011; prior thereto Chief Operating Officer, US Drilling and Manufacturing of Trinidad from January 2008 to September 2011.

Gavin Lane Calgary, Alberta Canada

Vice President, Finance Vice President, Finance since November 2013; Corporate Controller of Trinidad from March 2011 to October 2013; prior thereto Controller of Canadian Drilling Operations of Trinidad from March 2008 to February 2011.

Ron Parent Calgary, Alberta Canada

Vice President, Human Resources

Vice President, Human Resources since April 2014; Vice President, Human Resources at ATCO Structures and Logistics from September, 2011 to March 2014; previously Vice President, Human Resources and Corporate Services at ATCO Power from September 2008 to August 2011.

Security Holdings of Directors and Officers

As at March 30, 2016, the directors and officers of Trinidad beneficially owned, or controlled or directed, directly or indirectly, in the aggregate, 2,778,412 Trinidad Shares, representing approximately 1% of the issued and outstanding Trinidad Shares.

As at March 30, 2016, the directors and officers did not hold any Incentive Options or Senior Notes.

Audit Committee The Audit Committee’s primary purpose is to oversee our accounting and financial reporting processes. All the members of our Audit Committee are considered financially literate members within the meaning of the CSA rules.

The Audit Committee Charter (Charter) is attached to this Annual Information Form as Schedule A.



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Composition of the Audit Committee

All current members of the Audit Committee are independent and financially literate.

Members

Jim Brown (Chair)

Brian Burden

David Halford

Relevant Education and Experience

Jim Brown (Chair)

Mr. Brown has been an independent businessman since January 2009. Prior to this, Mr. Brown was Vice President and Chief Financial Officer of Fording Canadian Coal Trust and Elk Valley Coal Corporation, companies focused in the coal mining industry, from 2005 to 2009. He has 28 years' experience in the oil and gas industry including serving as Vice President, Finance and Chief Financial Officer at High Point Resources Inc. from 2004 to 2005; Vice President, Finance and Chief Financial Officer at Terraquest Energy Corp. from 2002 to 2004; Vice President, Finance and Chief Financial Officer at Richland Petroleum Corp. from 1997 to 2002; and Vice President, Finance and Chief Financial Officer at Dorset Exploration Ltd. from 1995 to 1997. Mr. Brown is also a member of Financial Executives International Canada, and has served as President of both the Calgary and Regina chapters. Mr. Brown is currently the chairman of Trinidad's Audit Committee.

Brian Burden

Mr. Burden has been an independent businessman since 2010, and has more than 25 years of experience as a senior finance professional. Mr. Burden served as the Executive Vice President and Chief Financial Officer of TransAlta Corporation, one of Canada's largest non-regulated power generation and wholesale marketing companies, from 2005 to 2010. Prior to that he served as the Chief Financial Officer of Molson Inc. from 2002 to 2005. Mr. Burden currently acts as a director of the Crius Energy Trust, an energy retailer in the US, and the Canadian Soccer Association, and is on the Advisory Council for Startech.com, a private company, engaged in manufacturing of IT business products.

David Halford

Mr. Halford is an independent businessman with over 25 years of experience. Previously, Mr. Halford was the Executive Vice-President, Finance & Planning, Chief Financial Officer and Chief Risk Officer of ENMAX Corporation from 2009 to 2015. Mr. Halford was involved in various oil and gas companies including holding the position of Chief Financial Officer at OPTI Canada Inc. and Irving Oil Limited. Prior to entering the oil and gas industry, Mr. Halford was a partner in the Corporate Finance/Mergers and Acquisitions Group in Deloitte & Touche LLP’s Toronto office.



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PRE-APPROVAL POLICIES AND PROCEDURES

All non-audit services performed by Trinidad's external auditors are pre-approved by the Audit Committee prior to the commencement of such services.

Compliance with Audit Committee Rules

The Audit Committee has reviewed and ensured compliance with all rules and responsibilities pursuant to National Instrument 52 - 110 - Audit Committees.

External Auditor Service Fees

Fees 2015

($) 2014

($)

Audit services 358,500 388,000

Audit related1 226,000 66,000

Tax services2 43,558 73,824

Total 628,058 527,824 1. Audit-related fees pertain to the quarterly reviews, acquisition of CanElson, reports and other documents filed with

securities regulators. 2. Tax services fees pertain to tax compliance services, tax advice and tax planning in connection with the completion

of the income tax returns for Trinidad and its subsidiaries and expatriate tax compliance matters, as well as additional complexity due to the addition of the joint venture.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions Other than as described below, no director or executive officer of the Company is, as at the date of this Annual Information Form, or was within ten years before the date of this Annual Information Form, a director, chief executive officer or chief financial officer of any company (including Trinidad) that: (i) was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

For the purposes hereof, the term order means any of the following should such order have been in effect for a period of more than 30 consecutive days: (i) a cease trade order; (ii) an order similar to a cease trade order; or (iii) an order that denied the relevant company access to any exemption under securities legislation.

Other than as described below, no director or executive officer of Trinidad, or, to our knowledge, a shareholder holding a sufficient number of securities of Trinidad to affect materially the control of Trinidad: (i) is, as at the date of this Annual Information Form, or has been within the ten years before the date of this Annual Information Form, a director or executive officer of any company (including Trinidad) that, while such person was acting in such capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver-manager or trustee appointed to hold its assets; or (ii) has, within ten years before the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or



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compromise with creditors, or has a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

On March 23, 2016, Mr. Heier resigned as Chief Executive Officer, President and Director of Millennium Stimulation Services Ltd. ("Millennium"). On March 24, 2016, the Alberta Court of Queen's Bench issued an order appointing KPMG Inc. as receiver and manager over Millennium's assets, undertakings and other properties.

On March 23, 2016, Mr. Stickland resigned as a Director of Millennium. On March 24, 2016, the Alberta Court of Queen's Bench issued an order appointing KPMG Inc. as receiver and manager over Millennium's assets, undertakings and other properties.

On March 23, 2016, Mr. Clarke resigned as Corporate Secretary of Millennium. On March 24, 2016, the Alberta Court of Queen's Bench issued an order appointing KPMG Inc. as receiver and manager over Millennium's assets, undertakings and other properties.

Mr. Halford was a director of OPTI Canada Inc. (OPTI) which on July 13, 2011 made an application for an order under the Companies’ Creditors Arrangement Act (CCAA), commencing a creditor protection proceeding in the Court of Queen’s Bench of Alberta. OPTI emerged from CCAA protection in December 2011.

No director or executive officer of Trinidad, or, to our knowledge, a shareholder holding a sufficient number of securities of Trinidad to affect materially the control of Trinidad, has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Conflicts of Interest Certain directors and officers named above may be directors or officers of issuers which are in competition with Trinidad and as such may encounter conflicts of interests in the administration of their duties with respect to Trinidad. Such conflicts of interest shall be dealt with according to Trinidad's code of conduct and the procedures required under the ABCA. The directors of Trinidad are required by law to act honestly and in good faith with a view to the best interests of Trinidad and to disclose any interests which they may have in any project or opportunity of Trinidad. If a conflict of interest arises at a meeting of the Board, any director in a conflict is obligated to disclose his interest and, if required, abstain from voting on such matter. See Risk Factors – Conflicts of Interest on page 29.

Legal Proceedings and Regulatory Actions Trinidad is involved in various legal actions which have occurred in the course of operations. Management is of the opinion that loses, if any, arising from such legal actions would not have a material effect on the Company.

There are no material legal proceedings to which Trinidad is a party or of which any of its property is the subject matter and no such material proceedings are known to either to be contemplated. During 2015, there were no penalties or sanctions imposed against Trinidad by a court relating to securities legislation or by a securities regulatory authority nor were there any settlement agreements entered into by Trinidad before a

Transfer Agents and Registrars


41

court relating to securities legislation or with a securities regulatory authority. There have been no penalties or sanctions imposed by a court or regulatory body against Trinidad that would likely be considered important to a reasonable investor making an investment decision.

Interest in Material Transactions To the knowledge of the directors and executive officers of Trinidad, none of the directors or executive officers of Trinidad, no person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the Trinidad Shares, nor any associate or affiliate of any of the foregoing, has had any material interest, direct or indirect, in any transaction with Trinidad since January 1, 2013 that has materially affected or is reasonably expected to materially affect Trinidad.

TRANSFER AGENTS AND REGISTRARS

The transfer agent and registrar for Trinidad is Equity Financial Trust Company at its principal offices in Toronto, Ontario (Head Office); Calgary, Alberta; Vancouver, British Columbia; and Montreal, Quebec.

MATERIAL CONTRACTS

Other than agreements entered into in the ordinary course of business, the only agreements entered into by Trinidad and the Trinidad Group, during the most recently completed financial year or before the most recently completed financial year that are still in effect, that are material to the Trinidad Group, as a whole, is as follows:

1. On December 12, 2014, Trinidad entered into a new senior secured revolving credit facility. The credit facility was amended in December 2015. The new credit facility includes a Canadian revolving facility of C$150 million and a US revolving facility of US$150 million and matures on December 12, 2018. The credit facility is subject to annual extensions of an additional year on each anniversary of the closing date upon the consent of the lenders holding two-thirds of the aggregate commitments under the facility. The credit facility is backed by a syndicate group which includes Major Canadian, US and international financial institutions. A copy of the credit facility is available under Trinidad's profile on SEDAR at www.sedar.com.

2. Effective August 11, 2015, Trinidad acquired all of the issued and outstanding

shares of CanElson at 1.0631 common shares of Trinidad for each CanElson share,

or $4.90 in cash per CanElson share to a maximum cash consideration of $50.0

million, as per the CanElson Acquisition Agreement. As a result of the elections

made by CanElson shareholders, Trinidad paid the full $50.0 million in cash and

the remainder of the acquisition in common shares of Trinidad (88,661,926

Trinidad common shares). CanElson was a drilling company that operated land-

based contract drilling rigs in Canada, the United States and Mexico. The

strategic business combination was completed to create a stronger, more diverse

North American drilling company with growth prospects internationally.

Interests of Experts


42

3. The Note Indenture. See General Description of Capital Structure – Senior Notes on page 32. A copy of the Note Indenture is available under Trinidad's profile on SEDAR at www.sedar.com.

4. The agreements related to the TDI-JV as described under Corporate Structure of – Joint Ventures on page 3. A copy of the TDI-JV agreement is available under Trinidad’s profile on www.sedar.com.

INTERESTS OF EXPERTS

Trinidad's external auditors are PricewaterhouseCoopers LLP (PwC), Chartered Accountants, who have prepared an independent auditor's report dated March 2, 2016 in respect of Trinidad's consolidated financial statements with accompanying notes as at and for the year ended December 31, 2015.

PwC has advised that they are independent with respect to Trinidad within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Alberta.

ADDITIONAL INFORMATION

Additional information relating to Trinidad and its predecessor entity, the Trust, is available under Trinidad's profile on SEDAR at www.sedar.com. In addition, additional information regarding directors' and officers' remuneration and indebtedness, principal holders of Trinidad's securities and securities authorized for issuance under equity compensation plans is contained in Trinidad's Information Circular dated March 22, 2016 regarding Trinidad's annual general meeting of Trinidad Shareholders to be held on May 10, 2016. Additional financial information is provided in Trinidad's comparative consolidated financial statements and MD&A for the year ended December 31, 2015. This information may be found on SEDAR at www.sedar.com or obtained from Trinidad upon written request to 1000, 585 - 8th Avenue S.W., Calgary, Alberta, T2P 1G1, Attention: Vice-President of Investor Relations.

Certain information regarding the Audit Committee that is required to be disclosed in accordance with National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators is contained under the heading Audit Committee in the Corporation's Annual Information Form for the year ended December 31, 2015 dated March 30, 2016, an electronic copy of which is available on SEDAR under the Corporation's profile at www.sedar.com.

March 30, 2016

http://www.sedar.com/

Forward-Looking Information


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FORWARD-LOOKING INFORMATION

This Annual Information Form contains certain forward-looking information and statements (collectively, forward looking information) within the meaning of applicable securities laws, based on estimates, forecasts and projections about the business of Trinidad Drilling and the industry in which Trinidad Drilling operates.

The use of any of the words expect, anticipate, continue, estimate, objective, ongoing, may, will, project, should, believe, plans, intends, confident, might, could, would, goal, target, potential and similar expressions are intended to identify forward-looking information.

In particular, but without limiting the foregoing, this Annual Information Form, contains forward-looking information pertaining to, among other things, the following:

− business plans for marketing drilling, coring, and manufacturing services; − the expectation that development will increase if certain regulatory approvals for

liquefied natural gas projects being pursued by major exploration and production companies are approved;

− the expectation that activity levels and dayrates will remain lower in 2016; − the timing for completion and cost of drilling rigs under construction; − business opportunities for Trinidad and the growth potential of the markets which

Trinidad currently competes in including Trinidad's expectations respecting its drilling segments and industry trends;

− the expectation that Trinidad’s deeper drilling capacity and modern fleet will make Trinidad drilling operations competitive;

− the effect of Trinidad's geographic diversification; − market utilization rates and market share for Trinidad's drilling rigs; − future market outlook as it relates to asset impairment; − the stability of Trinidad's revenue and cash flow resulting from its long-term, take-or-

pay contracts; − strength of customer relationships presence in strategic markets and deeper

capacity, modern asset base; − expectations that current legal actions against Trinidad will not have a material effect

on the Company; − labour costs; − the timing and amount of future payments of dividends; − expectations regarding environmental protection requirements; − future performance and operations of the joint venture arrangement; and − other expectations, beliefs, plans, goals, objectives, assumptions, information and

statements about possible future events, conditions, results of operations or performance.

The forward-looking information contained in this Annual Information Form reflect several material factors, expectations and assumptions including, without limitation:

− oil and natural gas production levels; − ability to construct rigs that can operate in a variety of plays; − commodity prices, foreign currency exchange rates and interest rates;



44

− the assumption that deeper wells translate into higher drilling days per well; − capital expenditure programs and other expenditures; − expectations regarding seasonality; − supply and demand for oil and natural gas; − the increase in proportion of wells being drilled either horizontally or directionally in

Canada, the US and internationally; − expectations regarding Trinidad's ability to raise capital and to increase its fleet of

drilling rigs through acquisitions and development; − scheduling and timing of certain projects and Trinidad's strategy for growth; − Trinidad's future operating and financial results; and − and treatment under governmental regulatory regimes and tax, environmental and

other laws.

The forward-looking information and statements included in this Annual Information Form is not a guarantee of future performance and should not be unduly relied upon. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, uncertainties and other factors which could cause actual results or events to differ materially from those anticipated and described in the forward-looking information including, without limitation:

− volatility in market prices for oil and natural gas; − volatility in exchange rates for the Canadian dollar relative to other world currencies; − liabilities and risks inherent in the drilling, and manufacturing industries, including

technical problems; − competition for, among other things, capital, the ability to secure manufacturers

(other than Trinidad Design and Manufacturing), if necessary for rig construction and skilled personnel;

− changes in general economic, market and business conditions in Canada, North America, and worldwide;

− actions by governmental or regulatory authorities including changes in income tax laws or changes in tax laws;

− the ability for Trinidad's customers to raise capital and to continue with their drilling programs;

− the impact of adverse weather on Trinidad's operations; − increases and overruns in construction costs; − oil and gas supply and demand; − increased competition; − lack of availability of qualified personnel or management; − industry conditions including the adoption of new environmental regulations and

other laws and regulations and changes in how they are interpreted and enforced; − risks inherent in Trinidad's ability to generate sufficient cash flow from operations to

meet its current and future obligations; − the failure to agree on major issues under the joint venture arrangement; and − the impact of non-performance, default or bankruptcy of the joint venture partner

on Trinidad.

Trinidad cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. Additional information on these and other factors, which could affect operations or financial results, are included under the heading Risk Factors. Additional



45

information may also be found in Trinidad's other reports on file with the Canadian securities regulatory authorities.

The forward-looking information contained in this Annual Information Form speaks only as of the date of this Annual Information Form, and Trinidad assumes no obligation to publicly update or revise such forward-looking information to reflect news events or circumstances, except as may be required pursuant to applicable laws.

Definitions, Abbreviations & Conversions


46

DEFINITIONS, ABBREVIATIONS & CONVERSIONS

Unless the context otherwise requires, in this Annual Information Form, the following terms and abbreviations have the meanings set forth below:

Definitions

2002 Arrangement means the reorganization of Trinidad, by way of plan of arrangement under the ABCA, into an income trust pursuant to an arrangement agreement dated August 8, 2002 among Trinidad, AcquisitionCo and the Trust.

2008 Arrangement means the reorganization of Trinidad, by way of a plan of arrangement under the ABCA, from an income trust into a corporation, effective March 10, 2008.

ABCA means the Business Corporations Act (Alberta).

AcquisitionCo means Trinidad Acquisition Corp., a corporation incorporated under the ABCA which was wholly-owned by the Trust and was amalgamated with Trinidad on September 17, 2002 pursuant to the 2002 Arrangement.

Axxis Group means Axxis Drilling Inc., Axxis Drilling (Land) Inc. and Axxis Drilling (Bareboat) Inc., corporations formed under the laws of the State of Delaware and indirectly owned by Trinidad.

Canadian Operations means Canadian drilling operations; for 2011 and prior, Canadian Operations also included TDM and Trinidad Well Servicing.

CanElson means CanElson Drilling Inc., an Alberta corporation and each of its subsidiaries.

CanElson Acquisition means the acquisition of CanElson, effective August 11, 2015.

CanElson Acquisition Agreement

means the agreement between CanElson and Trinidad regarding the CanElson Acquisition, dated June 10, 2015.

DCM means Diavaz CanElson de Mexico, S.A. de C.V., a joint venture which operates drilling and service rigs in Mexico.

DCM-JV means the joint venture between Trinidad and DCM.

Halliburton means Halliburton Company, who is an oilfield service company that offers services and products and integrated solutions to customers in the exploration, development, and production of oil and natural gas.

IFRS means International Financial Reporting Standards

Incentive Option means an option to acquire Trinidad Shares in accordance with the Incentive Option Plan.

Joint Venture Operations

means Trinidad’s 60% interest in the drilling operations of Trinidad Drilling International, a joint venture between Trinidad and Halliburton and Trinidad’s 50% interest in DCM

Manufacturing operations

means Trinidad’s drilling rig and equipment construction and fabrication operations, which builds and maintains Trinidad's drilling rigs and related equipment.



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Note Indenture means the indenture dated as of December 16, 2010 among Trinidad, certain subsidiary guarantees and Wells Fargo Bank, N.A. governing the terms of the Senior Notes.

Senior Notes means the 7.875% senior unsecured notes of Trinidad, due 2019 in the principal amount of US$450,000,000 issued pursuant to the Note Indenture.

Shareholder Rights Plan

means the Amended and Restated Shareholder Rights Plan Agreement dated May 8, 2014 (the "Shareholder Rights Plan") effective January 11, 2016. A copy of the amendment thereto relating to the change in rights agent have been filed on Trinidad's SEDAR profile at www.sedar.com on May 9, 2014 and January 11, 2016, respectively.

Trinidad or the Company

means the consolidated operations of Trinidad Drilling Ltd. and its subsidiaries.

Trinidad Drilling International or TDI-JV

means Trinidad’s joint venture arrangement with a wholly-owned subsidiary of Halliburton to operate drilling rigs for international projects outside of Canada and the US.

Trinidad Group means Trinidad, the US Consolidated Group, and Victory.

Trinidad Share means a common share in the capital of Trinidad.

Trinidad Shareholder means a holder of Trinidad Shares.

Trust means Trinidad Energy Services Income Trust, a trust fund under the laws of the Province of Alberta.

Trust Units means the trust units in the capital of the Trust, as constituted pursuant to the 2008 Arrangement.

US Consolidated Group means all the subsidiaries of Trinidad operating in the US, including the Axxis Group and TDLP.

US and International Operations

means, collectively, US Consolidated Group and UAE.

Victory Acquisition means the acquisition by Trinidad of all the outstanding shares of Victory, a privately-held oilfield equipment fabrication company based in Red Deer, Alberta, for consideration of $16.7 million on August 18, 2008.



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Abbreviations & Conversions In this Annual Information Form, the abbreviations and conversions set forth below have the following meanings:

Abbreviation Meaning

$ Canadian dollars

US$ US dollars

M Metres

To Convert From To Multiply By

Feet Metres 0.305

Metres Feet 3.281

Schedule A - Audit Committee Charter


49

SCHEDULE A - AUDIT COMMITTEE CHARTER

As of March 30, 2016

Establishment of Committee

(a) Committee

The Audit Committee (the Committee) is established by the Board of Directors (the Board of Directors) of Trinidad Drilling Ltd. (Trinidad) primarily for the purpose of overseeing the accounting and financial reporting processes and the reviews and audits of the financial statements of Trinidad.

The Committee shall assist the Board of Directors in fulfilling its oversight responsibilities by monitoring, among other things:

(i) the quality and integrity of the financial statements and related disclosure of Trinidad;

(ii) compliance by Trinidad with legal and regulatory requirements that could have a material effect upon the financial position of Trinidad which are not subject to the oversight of another committee of the Board of Directors;

(iii) the independent auditor's qualifications and independence; and

(iv) performance of Trinidad's internal audit function and independent auditor.

(b) Composition of Committee

The Committee shall consist of as many members as the Board of Directors shall determine, but in any event not fewer than three directors, provided that each member of the Committee shall be determined by the Board of Directors to be:

(i) an independent director for the purposes of and pursuant to Trinidad's corporate governance guidelines;

(ii) an unrelated and independent director as defined in and for the purposes of any applicable governance guidelines or listing standards of any stock or securities exchange upon which the securities of Trinidad are from time to time listed; and

(iii) an independent director for the purposes of any applicable corporate, securities or other legislation or any rule, regulation, instrument, policy, guideline or interpretation under such legislation.

At the time of his or her appointment to the Committee, each member of the Committee shall have, or shall acquire within reasonable time following appointment to the Committee, the ability to read and understand a set of financial statements that present a breadth and complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by Trinidad's financial statements.

(c) Appointment of Committee Members



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The members of the Committee shall be appointed by the Board of Directors on the recommendation of the Corporate Governance & Nominating Committee. The members of the Committee shall initially be appointed at the time of an annual meeting of shareholders and shall hold office until they are removed by the Board of Directors or until their successors are earlier appointed, or until they cease to be directors of Trinidad.

Committee Procedure

(a) Vacancies

Where a vacancy occurs at any time in the membership of the Committee, it may be filled by the Board of Directors on the recommendation of the Corporate Governance & Nominating Committee and shall be filled by the Board of Directors if the membership of the Committee is fewer than three directors. The Board of Directors may remove and replace any member of the Committee.

(b) Committee Chair

The Board of Directors shall appoint a Chair (the Chair) for the Committee. The Chair may be removed and replaced by the Board of Directors.

(c) Absence of Chair

If the Chair is not present at any meeting of the Committee, one of the other members of the Committee present at the meeting shall be chosen by the Committee to preside at the meeting.

(d) Secretary of Committee

The Committee shall appoint a Secretary who need not be a director of Trinidad.

(e) Regular Meetings

The Chair, in consultation with the Committee members, shall determine the schedule and frequency of the Committee meetings, provided that the Committee shall meet as many times per year as necessary to carry out its responsibilities and at least quarterly. The Committee at any time may, and at each regulatory scheduled Committee meeting shall, meet without management present and shall meet periodically with management and the independent auditor. The Committee shall also meet separately with the independent auditor at every meeting of the Committee at which the independent auditor is present.

(f) Special Meetings

The Chair, any two members of the Committee, the independent auditor or the Chief Executive Officer of Trinidad may call a special meeting of the Committee.

(g) Quorum

Two members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak to each other, shall constitute a quorum.

(h) Notice of Meetings

Notice of the time and place of every meeting shall be given in writing or by e mail or facsimile communication to each member of the Committee at least 48 hours prior to



51

the time fixed for such meeting; provided, however, that a member may in any manner waive notice of a meeting and attendance of a member at a meeting is a waiver of notice of the meeting, except where a member attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

(i) Agenda

The Chair shall develop and set the Committee's agenda, in consultation with other members of the Committee, the Board of Directors and management of Trinidad. The agenda and information concerning the business to be conducted at each Committee meeting shall, to the extent practical, be communicated to the members of the Committee sufficiently in advance of each meeting to permit meaningful review.

(j) Procedure, Records and Reporting

The Committee shall fix its own procedure at meetings and shall maintain minutes or other records of its meetings and activities in sufficient detail to convey the substance of all discussions held. Upon approval of the minutes by the Committee, the minutes shall be circulated to the members of the Board of Directors. However, the Chair may report orally to the Board of Directors on any matter in his or her view requiring the immediate attention of the Board of Directors.

(k) Delegation

The Committee shall have the power to delegate its authority and duties to subcommittees or individual members of the Committee as it deems appropriate.

(l) Attendance of Non-Members at a Meeting

At the invitation of the Chair, one or more officers or employees of Trinidad may, and if required by the Committee shall, attend a meeting of the Committee. Further, the Committee may invite to the meeting any advisors, legal counsel and other persons whose attendance it considers necessary or desirable in order to carry out its responsibilities.

(m) Outside Consultants or Advisors

The Committee, when it considers it necessary or advisable, may retain, at Trinidad's expense, outside consultants or advisors to assist or advise the Committee independently on any matter within its mandate. The Committee shall have the sole authority to retain or terminate such consultants or advisors, including the sole authority to approve the fees and other retention terms for such persons.

(n) Access

In discharging its oversight role, the Committee shall have full access to all books, records, facilities and personnel of Trinidad.

Mandate of Committee

(a) Appointment of Trinidad's Independent Auditor

Subject to confirmation by the independent auditor of its compliance with Canadian regulatory registration requirements, the Committee shall recommend to the Board of Directors the appointment of the independent auditor for purpose of preparing or



52

issuing any audit report or performing other audit, review or attest services for Trinidad, such appointment to be confirmed by Trinidad's Shareholders at each annual meeting. The Committee shall also recommend to the Board of Directors the approval of fees to be paid to the independent auditor for audit services and shall pre-approve the retention of the independent auditor for any permitted non-audit service. The Committee shall also be directly responsible for the retention and oversight of the work of the independent auditor (including resolution of disagreements between management of Trinidad and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for Trinidad. The independent auditor shall report directly to the Committee.

The Committee shall review the independence of the external auditor including a written report from the external auditor respecting its independence and consideration of applicable auditor independence standards.

(b) Specific Mandates

The Committee, to the extent required by applicable laws or rules, or otherwise considered by the Committee to be necessary or appropriate, shall:

(i) Oversight in Respect of Financial Disclosure

A. review, discuss with management of Trinidad and the independent auditor and recommend to the Board of Directors for approval:

I. the audited annual financial statements;

II. the annual information form;

III. the annual management's discussion and analysis;

IV. the portions of the management proxy circular, for any annual or special meeting of shareholders, containing significant financial information respecting Trinidad;

V. all financial statements included in prospectuses or other offering documents;

VI. all prospectuses and all documents which may be incorporated by reference in a prospectus, other than any pricing supplement issued pursuant to a shelf prospectus;

VII. any significant financial information respecting Trinidad contained in a material change report;

B. review, discuss with management of Trinidad and the independent auditor, and approve:

I. the unaudited interim financial statements;

II. the quarterly management's discussion and analysis;

III. the interim reports;



53

C. review and, if necessary, discuss with management of Trinidad and the independent auditor:

I. each press release which contains significant financial information respecting Trinidad or contains estimates or information regarding Trinidad's future financial or operational performance or prospects;

II. the use of pro forma or adjusted non-GAAP information;

III. financial outlooks and future-oriented financial information;

IV. financial information and earnings guidance provided to analysts and rating agencies; provided, however, that such discussion may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made). The Committee need not discuss in advance each instance in which Trinidad may provide earnings guidance or presentations to rating agencies;

D. review with management of Trinidad and the independent auditor major issues regarding accounting and auditing principles and practices as well as the adequacy of internal controls and procedures for financial reporting that could significantly affect Trinidad's financial statements;

E. review with management of Trinidad and the independent auditor, and satisfy itself as to the adequacy of the procedures that are in place for the review of Trinidad's disclosure of financial information extracted or derived from Trinidad's financial statements, and periodically assess the adequacy of those procedures;

F. review with management of Trinidad and the independent auditor (including those of the following that are contained in any report of the independent auditor): (a) all critical accounting policies and practices to be used by Trinidad in preparing its financial statements; (b) all alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of these alternative disclosures and treatments, and the treatment preferred by the independent auditor; and (c) other material communications between the independent auditor and management of Trinidad, such as any management letter or schedule of unadjusted differences;

G. review with management of Trinidad and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet transactions on Trinidad's financial statements;



54

H. review the plans of management of Trinidad and the independent auditor regarding any significant changes in accounting practices or policies and the financial and accounting impact thereof;

I. review with management of Trinidad, the independent auditor and, if necessary, legal counsel, any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of Trinidad, and the manner in which these matters have been disclosed in the financial statements; and

J. discuss with management Trinidad's material financial risk exposures and the steps management of Trinidad has taken to monitor and control such exposures, including Trinidad's financial risk assessment and financial risk management policies.

(ii) Oversight in Respect of Legal and Regulatory Matters

A. review, if necessary, with legal counsel, Trinidad's compliance policies, legal matters and any material reports or inquiries received from regulators or governmental agencies that could have a material effect upon the financial position of Trinidad and which are not subject to the oversight of another committee of the Board of Directors.

(iii) Oversight in Respect of the Independent Auditor

A. meet with the independent auditor prior to the annual audit to review the planning and staffing of the audit;

B. oversee the work of the independent auditors, including the independent auditors' work in preparing or issuing an audit report, performing other audit, review or attest services or any other related work;

C. review and, if advisable, select and recommend for shareholder approval the appointment of, the independent auditors. The Committee shall have ultimate authority to approve all audit engagement terms and fees, including the independent auditors' audit plan;

D. resolve any disagreements between management and the independent auditors as to financial reporting matters brought to its attention;

E. at least annually, discuss with the independent auditors such matters as are required by applicable auditing standards to be discussed by the independent auditors with the Committee;

F. at least annually, the Committee shall review a summary of the independent auditors' annual audit plan. The Committee shall consider and review with the independent auditors any material changes to the scope of the plan;



55

G. review a report prepared by the independent auditors in respect of each of the interim financial statements of Trinidad;

H. at least annually, and before the independent auditors issue their report on the annual financial statements, the Committee shall obtain from the independent auditors a formal written statement describing all relationships between the independent auditors and Trinidad; discuss with the independent auditors any disclosed relationships or services that may affect the objectivity and independence of the auditors; and obtain written confirmation from the auditors that they are objective and independent within the meaning of the applicable Rules of Professional Conduct/Code of Ethics adopted by the provincial institute or order of chartered accountants to which the independent auditors belong and other applicable requirements. The Committee shall take appropriate action to oversee the independence of the external auditors;

I. review annually the independent auditor's formal written statement of independence delineating all relationships between itself and Trinidad and review all such relationships;

J. receive and review annually the independent auditor's written report on its own internal quality control procedures; any material issues raised by the most recent internal quality control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, and any steps taken to deal with such issues;

K. review the experience, qualifications and performance of the senior members of the audit team of the independent auditor;

L. review and evaluate the independent auditor, including the qualifications and performance of the lead partner of the independent auditor team;

M. review with the independent auditor the adequacy and appropriateness of the accounting policies used in preparation of the financial statements;

N. meet separately with the independent auditor to review with them any problems or difficulties they may have encountered and specifically:

I. any difficulties which were encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information, and any disagreements with management of Trinidad; and

II. any changes required in the planned scope of the audit; and report to the Board of Directors on such meetings;



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O. review the annual post-audit or management letter from the independent auditor and management's response and follow-up in respect of any identified weakness, inquire regularly of management of Trinidad and the independent auditor of any significant issues between them and how they have been resolved, and intervene in the resolution if required; and

P. review the engagement reports of the independent auditor on unaudited financial statements of Trinidad.

(iv) Oversight in Respect of Audit and Non-Audit Services

A. have the sole authority to pre-approve all audit services (which may entail providing comfort letters in connection with securities underwritings) and all permitted non-audit services, other than non-audit services where:

I. the aggregate amount of all such non-audit services provided to Trinidad constitutes not more than 10% of the total amount of revenues paid by Trinidad to the independent auditor during the fiscal year in which the non-audit services are provided; and

II. such services were not recognized by Trinidad at the time of the engagement to be non-audit services; and

III. such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee.

The Committee may delegate to one or more designated members of the Committee the authority to grant pre-approvals required by this section. The decisions of any member to whom authority is delegated to pre-approve an activity shall be presented to the Committee at each of its scheduled meetings. If the Committee approves an audit service within the scope of the engagement of the independent auditor, such audit service shall be deemed to have been pre-approved for purposes of this section.

(v) Oversight in Respect of Internal Controls

A. periodically review Trinidad's system of internal controls; and

B. require management to implement and maintain appropriate systems of internal controls in accordance with applicable requirements, including internal controls over financial reporting and disclosure and to review, evaluate and approve these procedures. At least annually, the Committee shall consider and review with management, the internal auditors and the independent auditors:

I. the effectiveness of, or weaknesses or deficiencies in: the design or operation of Trinidad's internal controls (including computerized information system controls



57

and security); the overall control environment for managing business risks; and accounting, financial and disclosure controls (including, without limitation, controls over financial reporting), non-financial controls, and legal and regulatory controls and the impact of any identified weaknesses in internal controls on management's conclusions;

II. any significant changes in internal controls over financial reporting that are disclosed, or considered for disclosure, including those in Trinidad's periodic regulatory filings;

III. any material issues raised by any inquiry or investigation by Trinidad's regulators;

IV. Trinidad's fraud prevention and detection program, including deficiencies in internal controls that may impact the integrity of financial information, or may expose Trinidad to other significant internal or external fraud losses and the extent of those losses and any disciplinary action in respect of fraud taken against management or other employees who have a significant role in financial reporting; and

V. any related significant issues and recommendations of the independent auditors together with management's responses thereto, including the timetable for implementation of recommendations to correct weaknesses in internal controls over financial reporting and disclosure controls.

(vi) Oversight in Respect of Certain Policies

A. establish procedures for: (a) the receipt, retention and treatment of complaints received by Trinidad regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submissions by employees of Trinidad of concerns regarding questionable accounting or auditing matters; and

B. periodically review Trinidad's public disclosure policy.

(c) Non-Exhaustive List

The foregoing list of duties is not exhaustive, and the Committee may, in addition, perform such other functions as may be necessary or appropriate for the performance of its oversight responsibilities.

(d) Review of Committee's Charter

The Committee shall periodically assess the adequacy of this Charter and recommend any changes to the Board of Directors.



58

(e) Oversight Function

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that Trinidad's financial statements are complete and accurate or are in accordance with GAAP. These are the responsibilities of management of Trinidad and the independent auditor. The Committee and its Chair are members of the Board of Directors, appointed to the Committee to provide broad oversight of the financial risk and control related activities of Trinidad, and are specifically not accountable nor responsible for the day to day operation or performance of such activities. The role of all Committee members is to oversee the process, not to certify or guarantee the accuracy or completeness of the internal or external audit of Trinidad's financial information or public disclosure.

(f) No Rights Created

This Charter is a statement of broad policies and is intended as a component of the flexible governance framework within which the committees of the Board of Directors assist the Board of Directors in directing the affairs of Trinidad. While it should be interpreted in the context of all applicable laws, regulations and listing requirements, as well as in the context of Trinidad's Articles and By-laws, it is not intended to establish any legally binding obligations.

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