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Blackmont Capital analyst Roy Ma increased his price target on Trinidad Drilling Ltd. (OTCPK:TDGCF) after the company announced it will construct seven additional drill rigs in 2008 and 2009.

The seven new rigs are part of contracts signed with two major North American oil and gas exploration and production companies operating at the Haynesville shale development in Louisiana, one of the key emerging unconventional gas plays in the U.S. 

Mr. Ma said the new rig contracts, which are in addition to the nine drilling rigs and six service rigs Trinidad announced it is constructing earlier this year, will add C$105-million to its previous capex budget of C$153mm.  

Mr. Ma said:

We estimate the seven rigs will add annual EBITDA of about C$25-million to C$28-million to Trinidad, or about C$14.5-million in 2009 due to partial-year contribution. 

Upon full completion of the program, Trinidad will have 64 land-drilling rigs deployed in the U.S. and 62 in Canada. We like this balance because of the revenue diversification, the superior growth, and equipment efficiency of this strategy.

Mr. Ma raised his target on the stock from C$16.50 to C$17 and maintained his "buy" recommendation.

Source: Blackmont Raises Trinidad's Price Target on New Rig Contract