Trinity Exploration - Interim Results
28/09/2023 07:00
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RNS Number : 9162N Trinity Exploration & Production 28 September 2023
This announcement contains inside information as stipulated under the UK
version of the Market Abuse
Regulation No 596/2014 which is part of English Law by virtue of the European
(Withdrawal) Act 2018, as
amended. On publication of this announcement via a Regulatory Information
Service, this information is
in the public domain.
28 September 2023
Trinity Exploration & Production plc
("Trinity" or "the Company" or "the Group")
Interim Results
Resilient base business supporting transformation catalysts
Trinity Exploration & Production plc (AIM: TRIN), the independent E&P
company focused on Trinidad and Tobago ("T&T"), announces its unaudited
interim results for the six-month period ended 30 June 2023 ("H1 2023" or "the
Period").
Strategic Highlights
· Jacobin-1 was confirmed as an oil discovery on 7 August 2023.
Subsequently, the Well Services Limited Rig 60 drilling rig rigged down and a
heavy-duty workover rig, Rigtech Rig #9, mobilised to the wellsite to run the
completion, perforate and tie the well into production facilities. Final
testing of equipment is currently in progress and initial production is
anticipated within days. Oil produced will immediately be sold to the state
oil company, Heritage.
· Trinity was successful in its bid for the onshore Buenos Ayres block,
further leveraging our competitive advantage in the Palo Seco area, onshore
Trinidad subject to receiving the licence from the Ministry of Energy.
· The Company is progressing, with Petrofac, a Concept Screening study
for the development of further reserves and resources in its Galeota Block.
Initial findings from Petrofac's study are encouraging. These concepts are
now being economically assessed and ranked and, together with development
studies on the existing Trintes field, will form part of an integrated
approach to unlock further value from Trinity's East Coast Asset.
· Gas sampling and analyses that will underpin the Company's evaluation
of its Scope 1 emissions was completed during the period. In H2 2023
analysis of gas rate quantification will be undertaken to enable the Company
to quantify its Scope 1 emissions by the end of the year.
H1 2023 Operational Highlights
H1 2023 saw production levels broadly maintained against H1 2022 with a
programme of recompletions and workovers.
· H1 2023 average net sales volume was 2,861 bopd (H1 2022: 2,974
bopd).
Sales volumes were supported by three recompletions ("RCPs") (H1 2022: 11) and
62 workovers and reactivations ("WOs") (H1 2022: 61) undertaken during the
Period including 7 workovers started at the end of 2022 completed in 2023,
with swabbing continuing across the onshore and West Coast assets. Four
additional RCPs are being worked up for execution in H2 2023.
· The ABM-151 well in the Brighton Marine block, offshore the West
Coast of Trinidad, was returned to production on 21 March 2023 following an
extensive refurbishment of surface facilities and the installation of remote
surveillance technology. Between restart and the end of the period the well
flowed at an average rate of 175 bopd. The well produced on average
130 bopd during H1 2023 and Trinity continues to monitor the well closely.
H1 2023 Financial Highlights
· Average oil price realisation of USD 65.2/bbl for H1 2023 (H1
2022: USD 90.1/bbl). During the Period, the realised price that the Company
received for Onshore and West Coast oil sales was an average discount of 20.6%
to Brent; wider than the standard discount of approximately 15%. East Coast
oil sales are made under a fixed arrangement that is a 15% discount to
Brent.
The Company remains unhedged.
· Cash balance of USD 11.3 million as at 30 June 2023 (YE 2022: USD
12.1 million) reflecting a combination of strong operating cash generation, no
hedging or hedging losses incurred and limited investment in capex, including
only the initial cost to support the drilling of Jacobin-1. The Jacobin-1
drilling and completion costs are anticipated to exceed initial estimates due
to additional drilling days as a result of drilling challenges encountered and
additional testing and data acquisition scope than originally considered.
While the impact of the increased well costs will result in lower than
anticipated cash balances, we remain on track to continue to invest in our
growth options and commence our maiden interim dividend.
· Strong net cashflows generated from operating activities as at H1
2023 USD 6.3 million (H1 2022: USD 2.9 million).
· Revenues were reduced 30% to USD 33.8 million (H1 2022: USD 48.5
million) driven by lower oil prices and, to a lesser extent, lower volumes.
· Cash operating costs of USD 20.1/bbl (H1 2022: USD 17.6/bbl) driven
by supply chain increases, increased maintenance activities across the assets,
including supporting labour to complete these activities, and the overall
impact of lower sales production (2,861 in H1 2023 vs 2,974 in H1 2022)
contributed to the higher cash operating costs (per bbl) in H1 2023 vs H1
2022. This excludes the initial cost incurred on the Trintes Bravo fire
incident in H1 2023 of USD 0.1 million. Remediation work is expected to
continue into H2 2023.
· General and administrative costs of USD 6.3/bbl (H1 2022: USD
6.6/bbl) mainly due to lower consultancy fees incurred and levies driven by
lower oil prices.
· Average operating break-even for H1 2023 was moderately increased
at USD 34.5/bbl (unaudited) (H1 2022: USD 32.4/bbl) resulting from a higher
operating cost and slightly lower sales volume.
· The Group had drawn borrowings (overdraft) of USD 2.0 million at 30
June 2023 (YE 2022: USD 2.7 million).
Corporate Highlights
Inaugural Dividend
As announced in the Company's 2022 Full Year Results on 1 June 2023, the Group
will pay its first interim dividend of 0.5 pence per ordinary share to be paid
on 26 October 2023 to all shareholders on the register on 6 October 2023 (the
"Record Date").
The Dividend will be paid by electronic transfer. The Company's Registrar
will provide an option for non-UK shareholders to receive payments in another
currency.
Increased Overdraft Facility from USD 5.0 million to USD 8.0 million
Trinity agreed to an upsized credit facility with FirstCaribbean International
Bank (Trinidad & Tobago) Limited ("CIBC FirstCaribbean") on 25 August
2023, providing for an increase of the facility from USD 5 million to USD 8
million.
The increased facility will provide Trinity with the flexibility to follow-up
on the play-opening Jacobin-1 well, targeting further onshore activity and to
progress development planning for the Company's material Galeota East Coast
offshore asset.
Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:
"The first six months of 2023 saw Trinity progressing important catalysts
within our refreshed strategy.
First, our Jacobin-1 well successfully intersected multiple oil-bearing
sands. Success with Jacobin increases our confidence in the portfolio of
Hummingbird prospects that forms a cornerstone of our revitalised onshore
strategy.
Second, in June we were successful in our bid for the Buenos Ayres block which
lies immediately to the west of our existing Palo Seco licences. We have
started the acquisition of the Buenos Ayres EIA ahead of the formal award of
the licence to progress this strategic option with pace.
Third, we appointed Petrofac to undertake a Concept Screening study for the
development of further reserves and resources on our Galeota East Coast asset,
using a low cost, more flexible approach than originally envisaged.
Lastly, our maiden interim dividend will be paid in October, representing an
important aspect of our capital allocation policy that was designed to provide
our shareholders with a cash return, in addition to the growth options
currently being pursued.
I look forward to continuing to update shareholders on our further progress at
a very busy and exciting time for Trinity".
Enquiries
Trinity Exploration & Production Via Vigo Consulting
Jeremy Bridglalsingh, Chief Executive Officer
Julian Kennedy, Chief Financial Officer
Nick Clayton, Non-Executive Chairman
SPARK Advisory Partners Limited (Nominated Adviser & Financial Adviser) +44 (0)20 3368 3550
Mark Brady
James Keeshan
Cavendish Securities plc (Broker) +44 (0)20 7397 8900
Leif Powis (Corporate Broking) +44 (0)131 220 6939
Neil McDonald
Vigo Consulting Limited t (mailto:trinity@vigoconsulting.com) rinity
(mailto:trinity@vigoconsulting.com) @vigoconsulting.com
Finlay Thomson/Patrick d' Ancona (mailto:trinity@vigoconsulting.com)
+44 (0)20 7390 0230
About Trinity (www.trinityexploration.com (http://www.trinityexploration.com)
)
Trinity is an independent oil production company focused solely on Trinidad
and Tobago. Trinity operates producing and development assets both onshore
and offshore, in the shallow water West and East Coasts of Trinidad.
Trinity's portfolio includes current production, significant near-term
production growth opportunities from low-risk developments and multiple
exploration prospects with the potential to deliver meaningful
reserves/resources growth. The Company operates all of its ten licences and,
across all of the Group's assets, management's estimate of the Group's 2P
reserves as at the end of 2022 was 17.96 mmbbls. Group 2C contingent
resources are estimated to be 48.88 mmbbls. The Group's overall 2P plus 2C
volumes are therefore 66.84 mmbbls.
Trinity is quoted on AIM, a market operated and regulated by the London Stock
Exchange Plc, under the ticker TRIN.
Qualified Person's Statement
The technical information contained in the announcement has been reviewed and
approved by Mark Kingsley, Trinity's Chief Operating Officer. Mark Kingsley
(BSc (Hons) Chemical Engineering, Birmingham University) has over 35 years of
experience in international oil and gas exploration, development and
production and is a Chartered Engineer.
Disclaimer
This document contains certain forward-looking statements that are subject to
the usual risk factors and uncertainties associated with the oil exploration
and production business. Whilst the Group believes the expectation reflected
herein to be reasonable in light of the information available to it at this
time, the actual outcome may be materially different owing to macroeconomic
factors either beyond the Group's control or otherwise within the Group's
control.
Summary of 2023 half-year performance
OPERATIONAL REVIEW
The Group achieved net sales of 2,861 bopd in H1 2023 (H1 2022: 2,974 bopd).
Investment into production related activities such as RCPs, workovers and
swabbing, together with the already automated wells enabled the Company to
maintain a half year production rate broadly in line with H1 2022.
Annual and Half Year Sales by Region
12m 2022 H1 2022 H2 2022 H1 2023
Onshore 1,655 1,688 1,623 1,512
East Coast 1,051 1,037 1,065 1,011
West Coast 269 249 288 338
Total 2,975 2,974 2,976 2,861
Onshore operations
· H1 2023 average net sales were 1,512 bopd, a 10.4% decrease on 2022
(H1 2022 1,688 bopd). This movement is attributed to expected natural decline
coupled with deferral in volumes due to an unplanned electrical interruption,
which caused temporary shut in for certain key wells in Q2 2023. Trinity
continues to progress its automation initiative to minimise the effects of
electrical shutdowns. A total of 54 WOs and reactivations were completed in
H1 2023 (H1 2022: 43) in conjunction with 3 RCPs completed in H1 2023 (H1
2022: 11).
The H2 2023 work programme involves the progression of 4 RCPs and ongoing base
management via WOs, reactivations and swabbing across all onshore fields.
East Coast operations
· H1 2023 average net sales was 1,011 bopd (H1 2022: 1,037 bopd) an
2.5% decrease. The decrease in sales levels was as a result of a combination
of the impact of the Trintes Bravo generator fire, mechanical failures of
downhole pumps requiring workovers, and delays to planned remedial platform
topside work which impacted the timing of returning the wells to production.
A total of 7 WOs were undertaken during H1 2023 (H1 2022: 13 WOs).
H2 2023 work programme will include routine WOs and reactivations.
West Coast operations
· H1 2023 average net sales were 338 bopd (H1 2022: 249 bopd). The
35.7% increase in sales was the result of the successful reactivation of
ABM-151 and the continued stabilization of swabbing production and
stabilisation of the field's production. There was 1 WO conducted during
this period (H1 2022: three WOs), and the reactivation of ABM-151 produced at
an average rate of 130 bopd over the entire period.
H2 2023 work programme is expected to include continued stabilisation of
ABM-151, ongoing base management via WOs, and swabbing operations.
H1 2023 Key Performance Indicators
The Group was profitable in H1 2023 under Alternative Performance Measures
("APM") and IFRS basis. Lower oil price realisations and relatively stable
net sales volumes resulted in a 30% decrease in Revenues to USD 33.8 million
(H1 2022: USD 48.5 million) and a 19% decrease in Adjusted EBITDA Note 20 in
the financial statements to USD 10.4 million (H1 2022: USD 12.8 million). The
Period-end cash balance was USD 11.3 million (H1 2022: USD 15.0 million)
marginally lower from the opening position at the start of the period of $12.1
million. A summary of the period-on-period operational and financial
highlights are set out below:
H1 2023 H1 2022 Change %
Average realised oil price(1) USD/bbl 65.2 90.1 (28)
Average net sales(2) bopd 2,861 2,974 (4)
Revenues USD million 33.8 48.5 (30)
Cash balance USD million 11.3 15.0 (25)
IFRS Results
Operating Profit before SPT USD million 5.8 5.4 8
Total Comprehensive Income/(loss) USD million 0.7 (0.7) 197
Earnings per share - diluted USD cents 1.7 (0.9) 291
APM Results (APM measures exclude non-cash items)
Adjusted EBITDA(3) USD million 10.4 12.8 (19)
Adjusted EBITDA(4) USD/bbl 20.1 23.7 (15)
Adjusted EBITDA margin(5) % 30.8 26.3 17
Adjusted EBIDA after Current Taxes(6) USD million 6.7 4.8 40
Adj. EBIDA after Current Taxes per share - diluted US cents 16.9 11.4 48
Consolidated operating break-even(7) USD/bbl 34.5 32.4 6
Net cash plus working capital surplus(8) USD million 10.9 18.6 (41)
Notes:
1. Realised price: Actual price received for crude oil sales per
barrel ("bbl").
2. Average net sales: This refers to average sales attributable to
Trinity per day for all operations; lease operatorships, farm-out operations
and joint ventures.
3. Adjusted EBITDA: Operating Profit before Taxes for the period,
adjusted for Depreciation, Depletion & Amortisation ("DD&A") and other
non-cash expenses, namely Share Option Expenses, Impairment of Financial
Assets, FX Gains/Losses and Fair Value Gains/Losses on Derivative financial
instruments. Adjusted EBITDA for 2021 updated to include Covid-19 Expense
4. Adjusted EBITDA (USD/bbl): Adjusted EBITDA/sales volume over the
Period.
5. Adjusted EBITDA Margin (%): Adjusted EBITDA/Revenues.
6. Adjusted EBIDA after Current Taxes: Adjusted EBITDA less
Supplemental Petroleum Taxes ("SPT"), Petroleum Profits Tax ("PPT") and
Unemployment Levy ("UL").
7. Group operating break-even: The realised price/bbl where the
Adjusted EBITDA/bbl for the Group is equal to zero.
8. Net cash plus working capital surplus: Current Assets less
Current Liabilities (other than Derivative financial asset / liability and
Provision for other liabilities).
FINANCIAL REVIEW
Income Statement Analysis
H1 2023 H1 2022 Change
Production
Average realised oil price (USD/bbl) 65.2 90.1 (25)
Average net Sales (bopd) 2,861 2,974 (113)
Statement of Comprehensive Income USD'000 USD'000 USD'000
Operating revenues 33,754 48,515 (14,761)
Operating expenses (including realised Derivative expense and Covid-19 costs (23,367) (35,712) 12,345
but excluding Non-cash items and SPT)
Operating profit before Non-cash items and SPT 10,387 12,803 (2,416)
DD&A (4,472) (3,884) (588)
Other Non-Cash Items (87) (3,568) 3,481
Operating profit before SPT 5,828 5,351 477
SPT (3,247) (5,049) 1,802
Operating profit before exceptional items 2,581 302 2,279
Exceptional items (371) - (371)
Operating Profit after Exceptional items 2,210 302 1,908
Finance income 25 24 1
Finance cost (1,124) (648) (476)
Profit/(Loss) Before Taxation 1,111 (322) 1,433
Income Taxation expense (428) (76) (352)
Profit/(Loss) After Taxation 683 (398) 1,081
Total Comprehensive Income/(Loss) for the period
Exchange differences on translation of foreign operations (6) (324) 318
Total Comprehensive Income/(Loss) 677 (722) 1,399
Operating Revenues
Operating revenues of USD 33.8 million (H1 2022: USD 48.5 million) decreased
due to lower realised oil prices and marginally declining production volumes
sold in the Period.
Operating expenses (excluding Non-cash items)
Operating expenses (excluding non-cash items) of USD (23.4) million (H1 2022:
USD (35.7) million) comprised:
· Royalties of USD (9.7) million (H1 2022: USD (16.2) million), mainly
due to lower average oil prices and marginal decrease in sales volume.
· Production costs ("Opex") of USD (10.4) million (H1 2022: USD (9.5)
million), increased driven by supply chain increases, increased repairs and
maintenance activities across the Group's assets including supporting labour
to complete these activities.
· G&A expenditure of USD (3.3) million (H1 2022: USD (3.6)
million), mainly due to lower consultancy fees incurred and levies driven by
lower oil prices.
· Realised derivative expense of nil. The Group is unhedged, all
hedging instruments expired on 31 December 2022 (H1 2022: (6.0) million on
account of effective hedging instruments during that period and high oil
prices).
· COVID-19 related costs nil (H1 2022: USD (0.4) million).
Non-cash operating expenses
Non-cash operating expenses comprised:
· Depreciation, Depletion and Amortisation ("DD&A") charges of USD
(4.5) million (H1 2022: USD (3.9) million).
· Unrealised derivative (expenses)/income nil (H1 2022: USD (3.2)
million comprising the movement in the fair valuation of effective crude oil
derivatives during the period). There are no hedging instruments effective for
2023.
· Share option expense USD (0.3) million (H1 2022: USD (0.3) million).
· Foreign exchange gain USD 0.1 million (H1 2022: USD 0.0 million).
Operating Profit Before Supplemental Petroleum Taxes ("SPT")
The operating profit before SPT for the Period amounted to USD 5.8 million (H1
2022: USD 5.4 million). The increase is mainly due to a combination of lower
revenues, no derivative expenses in 2023, lower taxes and levies due to lower
oil prices in 2023 and effective cost management.
SPT
The Group incurred SPT charges in relation to its offshore assets in H1 2023
of USD (3.3) million (H1 2022: (5.0) million), on account of the realised oil
price being higher than USD 50.0/bbl throughout the Period. The onshore assets
did not incur any SPT liability as the realised price was below the SPT
threshold of USD 75.0/bbl and there is an amount of unused Investment Tax
Credit ("ITC") of USD 1.8 million which will be carried forward for future
use, limited to a one-year period. SPT is classified as "operating expenses"
rather than "income taxation" under IFRS.
Exceptional items
Exceptional items charge of USD (0.4) million (H1 2022: USD (0.0) million)
relates to:
· USD (0.3) million incidental one-off costs due to the Cyber incident
which occurred in December 2022.
· USD (0.1) million costs were incurred in the Period due to the
Trintes Bravo fire incident which occurred in H1 2023.
Net Finance Cost
Net finance costs for the period of USD (1.1) million (H1 2022: USD (0.6)
million), comprising:
· Unwinding of the discount on the decommissioning provision of USD
(1.1) million (H1 2022: USD (0.6) million) mainly due to the increase in the
decommission provision from H1 2022.
Income Taxation
Taxation charge for the period was USD (0.4) million (H1 2022: USD (0.1)
million), comprising:
· Petroleum Profits Tax ("PPT") of USD (0.3) million (H1 2022: USD
(2.1) million).
· Unemployment Levy ("UL") of USD (0.1) million (H1 2022: (0.8)
million).
· Deferred tax assets of nil (H1 2022: USD 2.8 million credit), refer
to note 16.
As at 30 June 2023, the Group had unrecognised tax losses of USD 199.3 million
(H1 2022: 207.4 million) which have no expiry date.
Total Comprehensive Income/(Loss)
Total Comprehensive Income for the Period was USD 0.7 million (H1 2022: USD
(0.7) million loss).
Cash Flow Analysis
Opening Cash Balance
Trinity began the year with an initial cash balance of USD 12.1 million (2022:
USD 18.3 million).
Summary of Statement of Cash Flows
H1 2023 H1 2022
USD'000 USD'000
Opening cash balance 12,131 18,312
Cash movement
Cash inflow from operating activities 6,769 7,713
Changes in working capital (37) (1,922)
Income taxation paid (475) (2,882)
Net cash inflow from operating activities 6,257 2,909
Net cash outflow from investing activities (5,576) (5,707)
Net cash outflow from financing activities (1,603) (331)
Decrease in cash and cash equivalents (922) (3,129)
Effects of foreign exchange rates on cash 92 (233)
Closing cash balance 11,301 14,950
Net cash inflow from operating activities
Net cash inflow from operating activities was USD 6.3 million (H1 2022: USD
2.9 million):
· Operating activities for H1 2023 generated an operating cash flow
before changes in working capital and income taxes of USD 6.8 million (H1
2022: USD 7.7 million).
· Changes in working capital resulted in a net decrease of USD 0.0
million (H1 2022: net decrease of USD (1.9) million).
· Income Taxation - PPT and UL paid USD (0.5) million (H1 2022: USD
(2.9) million) resulting from lower taxable profits resulting from lower oil
price.
Cash outflow from investing activities
Investing cash outflows for H1 2023 was USD (5.6) million (H1 2022: USD (5.7)
million) which included infrastructure investments across Trinity's assets,
production capex including RCPs in H1 2023, ABM-151 reactivation, drilling
planning and long lead investment for Jacobin-1 exploration well, subsurface
capex and exploration and evaluation capex.
Net cash outflow from financing activities
The financing cash outflow for H1 2023 was USD (1.6) million, comprising USD
(0.7) million repayment of bank overdraft, USD (0.3) million cash payment on
leases and USD (0.6) million in purchase of treasury shares.
Closing Cash Balance
Trinity's cash balance at 30 June 2023 was USD 11.3 million (31 December 2022:
USD 12.1 million).
Statement of Financial Position Analysis
H1 2023 YE 2022 Change
USD'000 USD'000 USD'000
Assets:
Non-current Assets 101,322 96,940 4,382
Current Assets 26,174 27,424 (1,250)
Liabilities:
Non-Current Liabilities 55,634 54,764 870
Current Liabilities 15,372 13,469 1,903
Equity and Reserves:
Capital and Reserves to Equity Holders 56,490 56,131 359
Cash plus working capital surplus 10,947 14,204 (3,257)
Non-current Assets
Non-current assets increased by USD 4.4 million to USD 101.3 million at H1
2023 from USD 96.9 million at YE 2022:
· Property, plant and equipment USD 44.1 million (YE 2022: USD 45.0
million) decrease of USD 0.9 million mainly relates to USD 3.2 million
additions less DDA of USD 4.1 million.
· Intangible assets USD 38.8 million (YE 2022: USD 33.5 million)
increase of USD 5.3 million mainly relates to accrued additions for Jacobin-1
Well less amortization of USD 0.1 million (YE 2022: USD 0.2 million).
· Deferred tax asset of USD 12.5 million (YE 2022: USD 12.5 million).
· Abandonment fund and performance bond of USD 5.3 million (YE 2022:
USD 5.1 million).
· Right of use asset of USD 0.6 million (YE 2022: USD 0.8 million)
relating to motor vehicles, office building, staff house and office equipment
leases that met the recognition criteria of a lease under IFRS 16.
Current Assets
Current assets decreased by USD 1.2 million to USD 26.2 million at H1 2023
from USD 27.4 million at YE 2022:
· Cash and cash equivalents of USD 11.3 million (YE 2022: USD 12.1
million). Reduction of USD 0.8 million mainly due to repayment of overdraft
facility (USD 0.7 million) and a combination of strong operating cash
generation being impacted by increased capex, including the initial cost to
support the drilling of Jacobin-1.
· Trade and other receivables of USD 9.8 million (YE 2022: USD 10.7
million).
o Trade and other receivables (less impairment) of USD 4.1 million (YE 2022:
USD 4.6 million)
o VAT recoverable of USD 4.2 million (YE 2022: USD 4.5 million).
o Prepayments and other receivables (less impairment) of USD 1.5 million (YE
2022: USD 1.6 million).
· Inventories USD 5.1 million (YE 2022: USD 4.6 million). The increase
is mainly due to added inventories to support the Jacobin-1 well.
Non-current Liabilities
Non-current liabilities increased to USD 55.6 million at H1 2023 from USD 54.7
million at YE 2022, primarily due to:
· Provision for other liabilities (predominantly decommissioning costs)
of USD 53.5 million (YE 2022: USD 52.5 million). The increase is mainly due to
unwinding of the discount rate at H1 2023.
· Deferred tax liability USD 1.9 million (YE 2022: USD 1.9 million).
· Lease liability of USD 0.2 million (YE 2022: USD 0.3 million).
Current Liabilities
Current liabilities increased to USD 15.4 million at H1 2023 (YE 2022: USD
13.5 million) primarily due to:
· Trade and other payables of USD 12.8 million (YE 2022: USD 9.9
million).
o Trade payables of USD 3.7 million (YE 2022: USD 2.6 million).
o Accruals and other payables of USD 7.6 million (YE 2022: USD 5.1 million)
mainly increased due to the Jacobin-1 Well costs accrued.
o SPT payable of USD 1.5 million (YE 2022: USD 2.2 million).
· CIBC FirstCaribbean bank overdraft facility USD 2.0 million (YE 2022:
USD 2.7 million). The reduction is mainly due to partial repayment of
overdraft facility.
· Lease liability of USD 0.4 million (YE 2022: USD 0.6 million).
Cash plus Working Capital Surplus
Cash plus working capital surplus calculated as Current Assets less Current
Liabilities (excluding Provisions for other liabilities and Derivative
assets/(liabilities)) decreased by 23% to USD 10.9 million (YE 2022: USD 14.2
million).
Reconciliation between Adjusted EBIDA after Current Taxes and Cash Inflow from
Operating Activities
H1 2023 USD'000 H1 2022
USD'000
Adjusted EBIDA after Current Taxes 6,670 4,831
Exceptional items (371) --
Foreign exchange gain 142 41
Translation differences as per Statement of Cash flows (142) (41)
Changes in Working Capital (37) (1,922)
Income tax incurred 470 2,882
Income tax paid (475) (2,882)
Cash flow from operating activities 6,257 2,909
APPENDIX 1: TRADING SUMMARY
A summary of realised price, production, royalties, Opex, G&A and
operating break-evens expenditure metrics is set out below:
Trading Summary Table
Details H1 2023 H1 2022 Change %
Realised price (USD/bbl) 65.2 90.1 (28)
Sales (bopd)
Onshore 1,512 1,688 (10)
West Coast 338 249 36
East Coast 1,011 1,037 (2)
Group Consolidated 2,861 2,974 (4)
Metrics (USD/bbl)
Royalties/bbl - Onshore 24.3 38.9 (38)
Royalties/bbl - West Coast 12.0 16.7 (28)
Royalties/bbl - East Coast 12.7 19.1 (34)
Royalties/bbl - Consolidated 18.8 30.1 (38)
Opex/bbl - Onshore 16.9 14.0 21
Opex/bbl - West Coast 26.9 28.2 (5)
Opex/bbl - East Coast 22.5 22.2 2
Opex/bbl - Group Consolidated 20.1 17.6 14
G&A/bbl - Group Consolidated 6.3 6.6 (5)
Operating break-even (USD/bbl)
Onshore 22.8 18.5 23
West Coast 32.3 26.9 20
East Coast 26.3 27.2 (3)
Group Consolidated 34.5 32.4 6
Notes: Group consolidated operating break-even: The realised price/bbl for
which the adjusted EBITDA/bbl exclusive of net derivative expense/income for
the Group is equal to zero.
STATEMENT OF DIRECTORS' RESPONSIBILITY
The Directors confirm that this condensed consolidated interim financial
information has been prepared in accordance with International Accounting
Standards ("IAS") and that the interim management report includes:
· an indication of important events that have occurred during the first
six (6) months and their impact on the condensed set of financial statements,
and a description of the principal risks and uncertainties for the remaining
six (6) months of the financial year; and
· the management report, which is incorporated into the directors'
report, includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face; and
· material related party transactions in the first six (6) months and
any material changes in the related-party transactions described in the last
annual report.
A list of the current Directors is maintained on the Trinity Exploration &
Production plc website www.trinityexploration.com.
By order of the Board
Jeremy Bridglalsingh
Chief Executive Officer
27 September 2023
INDEPENDENT REVIEW REPORT TO TRINITY EXPLORATION & PRODUCTION plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the London Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2023 which comprises of Condensed Consolidated Statement of Comprehensive
Income, Condensed Consolidated Statement of Financial Position, Condensed
Consolidated Statement of Changes in Equity and Condensed Consolidated Cash
Flow Statements and notes to the Condensed Consolidated Interim Financial
Statements.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the London Stock Exchange AIM Rules for Companies which
require that the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange AIM Rules for Companies for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly disclaim any
and all such liability.
Matt Crane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Chartered Accountants
London, UK
27 September 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Trinity Exploration & Production plc
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2023
(Expressed in United States Dollars)
Notes 6 months to 30 June 2023 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Revenues
Crude oil sales 33,751 48,514 92,232
Other income 3 1 7
33,754 48,515 92,239
Operating Expenses
Royalties (9,711) (16,204) (30,091)
Production costs (10,402) (9,498) (19,242)
Depreciation, depletion and amortisation 8-10 (4,472) (3,884) (7,617)
General and administrative expenses (3,254) (3,581) (7,181)
Net reversal / (impairment) of financial assets 25 (45) 46
Share option expense 15 (254) (316) (647)
Covid-19 expenses -- (459) (579)
Foreign exchange gain/(loss) 142 41 (394)
Realised derivative expense 3,12 -- (6,011) (10,446)
Fair value expense on derivative instruments -- (3,207) 2,883
(27,926) (43,164) (73,268)
Operating Profit Before Supplemental Petroleum Taxes ("SPT") 5,828 5,351 18,971
SPT (3,247) (5,049) (9,012)
Operating Profit Before Impairment and Exceptional Items 2,581 302 9,959
Impairment 4 -- -- (6,050)
Exceptional items 5 (371) -- (161)
Operating Profit After Impairment and Exceptional Items 2,210 302 3,748
Finance Income 7 25 24 48
Finance cost 7 (1,124) (648) (1,339)
Profit/(Loss) Before Income Taxation 1,111 (322) 2,457
Income Taxation expense 6 (428) (76) (2,344)
Profit/(Loss) for the period 683 (398) 113
Other Comprehensive Income /(loss)
Exchange differences on translation of foreign operations (6) (324) (20)
Total Comprehensive Income/(loss) for the period 677 (722) 93
Earnings per share (expressed in dollars per share)
Basic 21 0.02 (0.01) 0.00
Diluted 21 0.02 (0.01) 0.00
Trinity Exploration & Production plc
Condensed Consolidated Statement of Financial Position
for the period ended 30 June 2023
(Expressed in United States Dollars)
Notes As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
ASSETS $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current Assets
Property, plant and equipment 8 44,134 51,828 44,987
Right-of-use assets 9 572 608 838
Intangible assets 10 38,799 31,031 33,537
Abandonment fund 4,750 4,260 4,511
Performance bond 602 473 602
Deferred tax asset 16 12,465 14,294 12,465
101,322 102,494 96, 940
Current Assets
Inventories 5,100 4,283 4,615
Trade and other receivables 11 9,773 14,120 10,678
Cash and cash equivalents 11,301 14,950 12,131
26,174 33,353 27,424
Total Assets 127,496 135,847 124,364
Equity
Capital and Reserves Attributable to Equity Holders
Share capital 13 399 389 399
Share premium 13 -- -- --
Share based payment reserve 15 3,224 4,087 2,990
Reverse acquisition reserve (89,268) (89,268) (89,268)
Treasury shares 14 (2,088) -- (1,522)
Translation reserve (1,654) (1,971) (1,667)
Retained earnings 145,877 143,268 145,199
Total Equity 56,490 56,505 56,131
Non-current Liabilities
Lease liabilities 9 239 202 341
Deferred tax liability 16 1,898 1,983 1,940
Provision for other liabilities 17 53,469 56,295 52,460
Employee benefits 28 11 23
55,634 58,491 54,764
Current Liabilities
Trade and other payables 18 12,833 11,533 9,932
Bank overdraft 19 2,000 2,700 2,700
Lease liabilities 9 394 492 584
Derivative financial liability 12 -- 6,090 --
Provision for other liabilities 145 36 249
Taxation Payable -- -- 4
15,372 20,851 13,469
Total Liabilities 71,006 79,342 68,233
Total Shareholders' Equity and Liabilities 127,496 135,847 124,364
Trinity Exploration & Production plc
Condensed Consolidated Statement of Changes in Equity
for the period ended 30 June 2023
(Expressed in United States Dollars)
Share Capital Share Based Payment Reserve Reverse Acquisition Reserve Translation Reserve Retained Earnings Total
Treasury
Shares
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2022 389 3,784 (89,268) -- (1,650) 143,666 56,921
Share based payment charge -- 305 -- -- -- -- 305
Capital Reorganisation -- -- -- -- -- -- --
Translation difference -- (2) -- -- 3 -- 1
Total comprehensive loss for the period -- -- -- -- (324) (398) (722)
Balance at 30 June 2022 (unaudited) 389 4,087 (89,268) -- (1,971) 143,268 56,505
Balance at 1 January 2023 399 2,990 (89,268) (1,522) (1,667) 145,199 56,131
Share based payment charge -- 254 -- -- -- -- 254
LTIPs exercised -- (20) -- -- -- 15 (5)
Treasury shares (note 14) -- -- -- (566) -- -- (566)
Translation difference -- -- -- -- 19 (20) (1)
Total comprehensive profit for the period -- -- -- -- (6) 683 677
Balance at 30 June 2023 (unaudited) 399 3,224 (89,268) (2,088) (1,654) 145,877 56,490
Trinity Exploration & Production plc
Condensed Consolidated Statement of Cashflows
for the period ended 30 June 2023
(Expressed in United States Dollars)
Notes 6 months to 30 June 2023 6 months to 30 June 2022 Year end 31 December 2022
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Activities
Profit /(Loss) before taxation 1,111 (322) 2,457
Adjustments for:
Translation difference (142) (41) 394
Finance Income (25) (24) (48)
Finance cost 7 71 94 229
Share option expense 254 316 647
Finance cost - decommissioning provision 7 1,053 554 1,110
Depreciation, depletion and amortisation 8-10 4,472 3,884 7,617
Impairment of property, plant and equipment 8 -- -- 5,558
Inventory Impairment 5 -- -- 334
(Reversal of impairment)/impairment loss on financial assets (25) 45 (46)
Fair value on derivative financial instrument -- 3,207 (2,883)
Other non-cash items -- -- 158
6,769 7,713 15,527
Changes In Working Capital
Increase in Inventory (485) (463) (1,129)
Decrease/(increase) in Trade and other receivables 691 (3,657) (376)
(Decrease)/Increase in Trade and other payables (243) 2,198 1,353
(37) (1,922) (152)
Income taxation paid (475) (2,882) (3,390)
Net Cash Inflow From Operating Activities 6,257 2,909 11,985
Investing Activities
Exploration and Evaluation Assets (2,052) (363) (388)
Computer software and investment in research & development (284) (24) (102)
Purchase of property, plant & equipment (3,240) (5,320) (15,016)
Performance bond released -- -- (130)
Net Cash Outflow From Investing Activities (5,576) (5,707) (15,636)
Financing Activities
Finance income 25 24 48
Finance cost (28) (50) (94)
Proceeds from the issue of shares -- -- 10
Principal paid on lease liability (291) (261) (536)
Interest paid on lease liability (43) (44) (135)
Bank overdraft repayment (700) -- --
Acquisition of treasury shares (566) -- (1,522)
( )
Net Cash Outflow From Financing Activities (1,603) (331) (2,229)
Decrease in Cash and Cash Equivalents (922) (3,129) (5,880)
Cash And Cash Equivalents
At beginning of period 12,131 18,312 18,312
Effects of foreign exchange rates on cash 92 (233) (301)
Decrease (922) (3,129) (5,880)
At end of period 11,301 14,950 12,131
Trinity Exploration & Production plc
Notes to the Condensed Consolidated Financial Statements for the period ended
30 June 2023
1 Background, Accounting Policies and Estimates
Background
Trinity Exploration & Production plc ("Trinity") is incorporated and
registered in England and trades on the Alternative Investment Market ("AIM"),
a market operated by London Stock Exchange plc. Trinity ("the Company") and
its subsidiaries (together "the Group") are involved in the exploration,
development and production of oil reserves in Trinidad and Tobago (T&T).
Basis of Preparation
These condensed consolidated interim financial statements for the six months
ended 30 June 2023 have been prepared in accordance with international
accounting standards as adopted in the United Kingdom. The condensed
consolidated interim financial statements should be read in conjunction with
the annual financial statements for the year ended 31 December 2022, which
have also been prepared in accordance with IFRS.
The results for the six months ended 30 June 2023 and 30 June 2022 have been
reviewed, not audited, and do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2022 were approved by the board of directors and
delivered to the Registrar of Companies. The report of the independent
auditors on those accounts was unqualified. The interim report has been
reviewed by the auditor.
Going Concern
The Board has adopted the going concern basis in preparing the condensed
consolidated interim financial statements.
In making their going concern assessment, the Board have considered the
Group's current financial position, budget and cash flow forecast. The base
case cashflow forecast at a minimum contemplated a 12-month outlook
illustrating the ability of the Group to operate on a going concern basis one
year post completion of the interim review. The base cashflow forecast
demonstrated that the Group will remain with a positive cash flow position,
and as such being able to meet its liabilities as they fall due.
The base case cashflow forecast was prepared considering the follow:
· Future oil prices assumed to be in line with the forward curve
prevailing at 1 September 2023, with an average Brent oil price of USD
87.15/bbl in the period September to December 2023. The Brent forward price
curve applied in the cash flow forecast starts at USD 88.20/bbl in September
2023, and fluctuates to USD 86.12/bbl in December 2023 through to USD
80.72/bbl in December 2024.
· Average forecast production for the period 1 September 2023 to
December 2023 of 2,809 bopd and for the 12 months to December 2024 of 2,719
bopd with production being maintained by RCPs, WOs and swabbing activities and
Jacobin-1 well a modest annualised average 80 bopd in 2024.
· SPT not being incurred on the onshore assets in H2 2023 and 2024
due to lower realised oil prices than the SPT threshold for small onshore
operators USD 75.0/bbl.
· Maintained overdraft at USD 2.0 million.
· Trinity continuing to progress planned growth and business
development opportunities.
Management considered a separate stressed scenario including:
· the effect of reductions in Brent oil prices at $60.0/bbl being
sustained across the forecast period, noting that the base case pricing is in
line with market prices; and
· the compounded impact of a reduction in production by 10%.
The stressed case cash flow forecast allows for the impact of mitigating
actions that are within the Group's control which include:
· Reducing non-core and discretionary opex and administrative costs
across the forecast period.
· Reducing discretionary capital expenditure and capital returns
over the forecast period.
The stressed case cashflow forecasts demonstrate that the Group's cash
balances are maintained under such scenarios and as such are sufficient to
meet the Group's obligations as they fall due.
As a result, at the date of approval of the interim financial statements, the
Board have a reasonable expectation that the Group has sufficient and adequate
resources to continue in existence for at least twelve months post approval of
these financial statements and is poised for continued growth. For this
reason, the Board have concluded it is appropriate to continue to adopt the
going concern basis of accounting in the preparation of the condensed
consolidated interim financial statements.
Accounting policies
The accounting policies adopted are consistent with those of the previous
financial year 31 December 2022 and corresponding interim reporting period,
except for those set out in the standards below:
- New standards and amendments effective for periods beginning on
1 January 2023 and therefore relevant to these condensed consolidated interim
financial statements
· IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 (Amendment - Disclosure of Accounting Policies)
· IAS 8 Accounting policies, Changes in Accounting Estimates and
Errors (Amendment - Definition of Accounting Estimates)
· IAS 12 Income Taxes (Amendment - Deferred Tax related to Assets
and Liabilities arising from a Single Transaction)
Cash and cash equivalents
For the purpose of presentation in the condensed consolidated statement of
cash flows, cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, and other short-term, highly liquid
investments with original maturities of three months or less that are readily
convertible to known amounts of cash.
Trade receivables
Trade receivables are amounts due from the Group's sole customer for crude oil
sold in the ordinary course of business. They are generally due for settlement
within 30 days and therefore are all classified as current. Trade receivables
are recognised initially at the amount of consideration that is unconditional
unless they contain significant financing components, when they are recognised
at fair value.
Impairment of financial assets
The Group applied the simplified approach to determine impairment of its trade
and other receivables. The simplified approach requires expected lifetime
losses to be recognised from initial recognition of the receivables. This
involves determining the expected loss rates using a provision matrix that is
based on the Group's historical default rates observed over the expected life
of the receivables and adjusted for forward looking estimates. This is then
applied to the gross carrying amount of the receivables to arrive at the loss
allowance for the period.
Financial assets recognition of impairment provisions under IFRS 9 is based on
the expected credit losses ("ECL") model. The ECL model is applicable to
financial assets classified at amortised cost and contract assets under IFRS
15: Revenue from Contracts with Customers. The measurement of ECL reflects an
unbiased and probability weighted amount that is available without undue cost
or effort at the reporting date, about past events, current conditions and
forecasts of future economic conditions.
Trade and other payables
Trade and other payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest rate
method.
Segment Information
Management have considered the requirements of IFRS 8 Operating Segments, in
regard to the determination of operating segments, and concluded that the
Group has only one significant operating segment being the exploration and
development, production and extraction of hydrocarbons.
All revenue is generated from crude oil sales in Trinidad and Tobago
("T&T") to one customer, Heritage Petroleum Company Limited ("Heritage").
All non-current assets of the Group are located in T&T.
Derivative financial instruments and hedging activities
The Company has not applied hedge accounting and all derivatives are measured
at fair value through profit and loss.
Estimates
The preparation of condensed consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year ended 31
December 2022. Reference can be made note 3 (Critical Accounting Estimates and
Judgements), in the Annual Report December 2022.
2 Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, fair value interest rate risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk. The Group's overall
risk management program seeks to minimise potential adverse effects on the
Group's financial performance.
The condensed consolidated interim financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements; they should be read in conjunction with the Group's
annual financial statements for 2022, which can be found at
www.trinityexploration.com (http://www.trinityexploration.com/) .
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
short-term funds and the availability of funding through an adequate amount of
committed credit facilities. Management monitors rolling forecasts of the
Group's liquidity and cash and cash equivalents on the basis of expected cash
flow. As at 30 June 2023, the Group held cash at bank of $11.3 million
(2022: $12.1 million).
Credit risk
Credit risk arises from Cash and Cash equivalents, deposits with banks and
financial institutions, as well as credit exposures to customers, including
outstanding receivables. For banks and financial institutions, management
determines the placement of funds based on its judgement and experience to
minimise risk.
All sales are made to a state-owned entity -Heritage.
3 Derivative expense
30 June 2023 30 June 2022
31 December 2022
$'000 $'000 $'000
Realised derivative expense -- (6,011) (10,446)
FV of derivative financial instruments -- (3,207) 2,883
Total expense -- (9,218) (7,563)
All derivative instruments expired at 31 December 2022. The Group does not
have any derivative instruments in place for 2023.
4 Impairment
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Impairment of inventory -- -- 334
Impairment of property, plant and equipment -- -- 5,558
Other impairment of property, plant and equipment -- -- 158
Total expense -- -- 6,050
Management performed an indicator of impairment assessment at 30 June 2023.
Crude oil price forecast were noted to be depressed at 30 June 2023 which
showed a potential impairment of USD 1.6 million. However, oil prices
recovered post 30 June 2023. Sensitivity analysis on revised oil price
forecast carried out using 1 September 2023 pricing curve showed there were no
material impairment charges to the Group's assets. Subsequent to 1 September
2023, oil prices continue to trend upwards and as such no impairment
indicators were identified at H1 2023. Another impairment assessment will be
performed at the year-end.
5 Exceptional Items
Items that are material either because of their size, their nature, or that
are non-recurring are considered as exceptional items and are presented within
the line items to which they best relate. During the current period,
exceptional items as detailed below have been included in the condensed
consolidated statement of comprehensive income. An analysis of the amounts
presented as exceptional items in these condensed interim financial statements
are highlighted below.
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
ICT incident cost 280 -- 161
Bravo fire incident cost 91 -- --
Exceptional items charge 371 -- 161
· ICT incident cost captures expenditures related to the response
on the cyber incident which occurred in December 2022.
· Bravo Fire incident costs related to initial costs incurred in
responding to the incident in H1 2023.
6 Income taxation expense
a. Taxation 30 June 2023 30 June 2022 31 December 2022
Current tax $'000 $'000 $'000
Petroleum profits tax 336 2,058 2,404
Unemployment levy 134 824 960
Deferred tax
- Current period
Movement in asset due to tax losses recognised (Note 16) -- (2,764) (935)
Movement in liability due to accelerated tax depreciation (note 16) (42) (42) (85)
Income tax expense 428 76 2,344
Current tax: The Group's effective tax rate varies based on jurisdiction.
Tax rates: 30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Corporation Tax UK 19% 19% 19%
Corporation Tax TT 30% 30% 30%
Petroleum Profits Tax 50% 50% 50%
Unemployment levy 5% 5% 5%
Deferred tax:
The Group has a deferred tax asset of $12.5 million on its condensed
consolidated statement of financial position which is the amount it expects to
recover within 3 years based on the expected taxable profits generated by
Group companies over that period.
7 Finance income
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Interest income 25 24 48
Finance costs
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Decommissioning - Unwinding of discount (1,053) (554) (1,110)
Interest and other expenses on overdraft (28) (50) (94)
Interest on leases (43) (44) (135)
(1,124) (648) (1,339)
8 Property, Plant and Equipment
Plant & Equipment Leasehold & Buildings Oil & Gas Property Total
$'000 $'000 $'000 $'000
Opening net book amount at 1 January 2023 4,255 1,271 39,461 44,987
Additions 868 12 2,368 3,248
DD&A charge for period (293) (96) (3,712) (4,101)
Closing net book amount at 30 June 2023 4,830 1,187 38,117 44,134
At 30 June 2023
Cost 19,061 3,495 325,865 348,421
Accumulated DD&A and impairment (14,231) (2,308) (287,748) (304,287)
Closing net book amount at 30 June 2023 4,830 1,187 38,117 44,134
Leasehold & Buildings Oil & Gas Property Total
Plant & Equipment
$'000 $'000 $'000 $'000
Opening net book amount at 1 January 2022 2,919 1,388 45,200 49,507
Additions 1,803 66 3,964 5,833
DD&A charge for period (275) (93) (3,146) (3,514)
Translation difference -- -- 2 2
Closing net book amount at 30 June 2022 4,447 1,361 46,020 51,828
At 30 June 2022
Cost 18,059 3,478 322,504 344,041
Accumulated DD&A and impairment (13,612) (2,117) (276,486) (292,215)
Translation difference -- -- 2 2
Closing net book amount at 30 June 2022 4,447 1,361 46,020 51,828
Leasehold & Buildings Oil & Gas Assets Total
Plant & Equipment
$'000 $'000 $'000 $'000
Year ended 31 December 2022
Opening net book amount at 1 January 2022 2,919 1,388 45,200 49,507
Disposals -- -- -- --
Transfers -- -- (2,451) (2,451)
Additions 1,999 71 13,062 15,132
Adjustment for decommissioning estimate -- -- (4,595) (4,595)
Impairment charge (note 4) (62) -- (5,654) (5,716)
DD&A charge for year (601) (188) (6,101) (6,890)
Closing net book amount 31 December 2022 4,255 1,271 39,461 44,987
At 31 December 2022
Cost 18,193 3,483 323,497 345,173
Accumulated DD&A and impairment (13,938) (2,212) (284,036) (300,186)
Closing net book amount 4,255 1,271 39,461 44,987
9 Leases
(i) Amounts recognised in the condensed consolidated statement of
financial position.
The condensed consolidated statement of financial position shows the following
amounts relating to leases:
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Right-of-use assets
Non-current assets 572 608 838
Lease Liabilities
Current 394 492 584
Non-current 239 202 341
633 694 925
The ROU assets relate to motor vehicles, office building, staff house and
office equipment leases that met the recognition criteria of a Lease under
IFRS 16.
(ii) Amounts recognised in the condensed consolidated statement of
comprehensive income.
The condensed consolidated statement of comprehensive income shows the
following amounts relating to leases:
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Depreciation charge of ROU assets
Depreciation (265) (258) (534)
Interest expense (including finance cost) (43) (44) (135)
The total cash outflow for leases in June 2023 was $0.3 million (June 2022:
$0.3 million)
10 Intangible Assets
Computer Software Exploration and evaluation assets Research and Development Total
$'000 $'000 $'000 $'000
Opening net book amount at 1 January 2023 405 32,903 229 33,537
Additions 204 5,084 80 5,368
Amortisation charge for the year (106) -- -- (106)
At 30 June 2023 503 37,987 309 38,799
Opening net book amount at 1 January 2022 496 30,217 46 30,759
Additions 24 219 141 384
Amortisation charge for the year (112) -- -- (112)
Closing net book amount at 30 June 2022 408 30,436 187 31,031
Opening net book amount at 1 January 2022 496 30,217 46 30,759
Additions 102 235 183 520
Transfers -- 2,451 -- 2,451
Amortisation charge for the year (193) -- -- (193)
Closing net book amount at 31 December 2022 405 32,903 229 33,537
· Computer Software: Costs incurred in connection with software.
· Exploration and Evaluation asset: The opening balance mainly
represents the cost for the TGAL 1 exploration well and classification of PS-4
acquisition cost to E&E costs. Additions during H1 2023 related to the
drilling of Jacobin exploration well of USD 5.0 million.
· Research and Development: In 2023, costs incurred in connection
with various renewable energy initiatives.
11 Trade and Other Receivables
30 June 2023 30 June 2022 31 December 2022
Due within one year $'000 $'000 $'000
Trade receivables 4,067 6,650 4,643
Less: provision for impairment of trade receivables (1) (6) (4)
Trade receivables: net 4,066 6,644 4,639
Prepayments 866 1,084 969
VAT recoverable 4,182 5,364 4,544
Other receivables 693 1,174 582
Less: Provision for Impairment of other receivables (34) (146) (56)
9,773 14,120 10,678
The fair value of trade and other receivables approximate their carrying
amounts.
The Group applies the IFRS 9 simplified model for measuring ECL which uses a
lifetime expected loss allowance and are measured on the days past due
criterion.
Trade receivables - Heritage net sales receipts have been collected on a
timely basis. Since the Joint Interest Billing ("Jibs") balances are
outstanding, an ECL was calculated at 30 June 2023 of $0.0 million (31
December 2022: $0.1 million) against Other receivables.
VAT recoverable - As at 31 December 2022 the VAT recoverable amount was $4.7m.
During the period ending 30 June 2023, net refunds received amounted to $2.7
million and the Group generated refunds of $2.1 million.
12 Derivative Financial Liabilities
The following table compares the carrying amounts and fair values of the
group's financial assets and financial liabilities as at 30 June 2022.
As at 30 June 2023 As at June As at 31 December 2022
2022
$'000 $'000 $'000
Derivative Liability -- (6,090) --
Total -- (6,090) --
The group considers that the carrying amount of the following financial assets
and financial liabilities are a reasonable approximation of their fair value:
- Trade receivables
- Trade payables
- Cash and cash equivalents
Fair Value Hierarchy
The level in the fair value hierarchy within which the derivative financial
asset is categorised is determined on the basis of the lowest level input that
is significant to the fair value measurement.
The derivative financial assets are classified in their entirety into only one
of the three levels.
The fair value hierarchy has the following level:
- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities
- Level 2 - inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
- Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Level 2 recurring fair value measurements:
As at 30 As at 30 June 2022 As at 31 December 2022
June 2023 $'000 $'000 $'000
Opening balance -- (2,883) (2,883)
Opening derivative instrument realised -- 2,883 2,883
Derivative expense (loss in fair value) -- (6,090) --
Closing balance -- (6,090) --
All derivative instruments expired at 31 December 2022. The Group does not
have any derivative instruments in place for 2023.
13 Share Capital
Number of shares Share Share premium Total
capital $'000
$'000 $'000
As at 1 January 2023 and 30 June 2023 39,884,637 399 -- 399
The Company does not have a limited amount of authorised share capital.
14 Treasury Shares
Treasury shares are shares in the Company that are held by the Company. In
September 2022, the Group announced a share buyback programme and subsequently
announced a second and third tranche of its share buyback programme which
ended on 30 June 2023.
Number of shares repurchased Cost Total
$'000 $'000
Share buyback 1,549,000 2,088 2,088
15 Share Based Payment Reserve
The share-based payments reserve is used to recognise:
- The grant date fair value of options issued to employees but not
exercised.
- The grant date fair value of share awards issued to employees.
- The grant date fair value of deferred share awards granted to employees
but not yet vested; and
- The issue of shares held by the Employee Share Trust to employees.
During 2023 the Group had in place share-based payment arrangements for its
employees and Executive Directors, the LTIP. The Share Option Plan is fully
vested and expensed. The current year charge through share-based payments are
in relation to the LTIP arrangements shown below:
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
At 1 January 2,990 3,784 3,784
Share based payment expense 254 305 622
Long term incentive plan -- -- --
Lapsed options released to retained earnings -- -- (1,416)
LTIPs exercised and released to retained earnings (20) -- --
Translation difference -- (2) --
At 30 June/31 December 3,224 4,087 2,990
There were no new issue of LTIPs for 2023 as at 30 June 2023.
16 Deferred Income Taxation
The analysis of deferred income taxes is as follows:
30 June 2023 30 June 2022 31 December 2022
Deferred tax assets: $'000 $'000 $'000
-Deferred tax assets to be recovered in more than 12 months (12,465) (14,294) (12,465)
Deferred tax liabilities:
-Deferred tax liabilities to be settled in more than 12 months 1,898 1,983 1,940
The deferred tax balances are analysed below:
1 January 30 June 31 Dec 30 June
2022 Movement 2022 Movement 2022 Movement 2023
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Deferred tax assets
Tax losses recognised (11,530) (2,764) (14,294) (12,465) -- (12,465)
1,829
(11,530) (2,764) (14,294) (12,465) -- (12,465)
1,829
Deferred tax liabilities
Accelerated tax depreciation 13,839 -- 13,839 13,839 -- 13,839
--
Fair value uplift (11,815) (41) (11,856) (43) (11,899) (42) (11,941)
2,024 (41) 1,983 (43) 1,940 (42) 1,898
There was no change to the deferred tax asset (DTA) at 30 June 2023. A
review was performed using the oil price forward curve at 30 June 2023 which
showed a potential reduction of $1.4 million from $ 12.5 million.
Sensitivity analysis on a revised oil price forecasts carried out using 1
September 2023 pricing curve showed the DTA increased to $14.0 million due to
the steady increase in crude oil prices. Based on the crude price volatility
no changes were made to the DTA held at 30 June 2023 and as at 31 December
2023 a further assessment would be performed.
Deferred income tax assets are recognised for tax loss carry-forwards to the
extent that the realisation of the related tax benefit through future taxable
profits are probable. The Group recognises deferred tax assets over a 3 year
outlook which is conservative and consistent with prior periods. The Group
has unrecognised tax losses amounting to $ 199.3 million which have no expiry
date (2022: $ 207.4 million).
Deferred tax assets and liabilities are not shown offset in this condensed
consolidated statement of financial position. Deferred tax assets and
liabilities can only be offset if an entity has a legal right to settle
current tax amounts on a net basis and Deferred Tax amounts are levied by the
same tax authority (as per IAS 12).
17 Provisions and Other Liabilities
Non-Current: Decommissioning cost Closure of pits Total
$'000 $'000 $'000
6 months ended 30 June 2023
Opening amount as at 1 January 2023 51,857 603 52,460
Unwinding of discount 1,053 -- 1,053
Revision to estimates -- -- --
Translation differences (45) 1 (44)
Closing balance as at 30 June 2023 52,865 604 53,469
6 months ended 30 June 2022
Opening amount as at 1 January 2022 55,220 470 55,690
Unwinding of discount 554 -- 554
Revision to estimates -- (3) (3)
Translation differences 54 -- 54
Closing balance as at 30 June 2022 55,828 467 56,295
Year ended 31 December 2022
Opening amount as at 1 January 2022 55,220 470 55,690
Unwinding of discount 1,110 -- 1,110
Revision to estimates (4,595) -- (4,595)
Additions -- 138 138
Translation differences 122 (5) 117
Closing balance at 31 December 2022 51,857 603 52,460
Current: Other provisions Litigation claims Total
$'000 $'000 $'000
6 months ended 30 June 2023
Opening amount as at 1 January 2023 112 136 248
Settlements (103) -- (103)
Closing balance as at 30 June 2023 9 136 145
6 months ended 30 June 2022
Opening amount as at 1 January 2022 0 46 46
Settlements -- (10) (10)
Closing balance as at 30 June 2022 0 36 36
Year ended 31 December 2022
Opening amount as at 1 January 2021 0 46 46
Additions 112 91 203
Closing balance at 31 December 2022 112 137 249
18 Trade and Other Payables
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Trade payables 3,688 2,733 2,605
Accruals 7,079 5,246 4,661
Other payables 580 454 500
SPT 1,486 3,100 2,166
12,833 11,533 9,932
19 Bank Overdraft
30 June 2023 30 June 2022 31 December 2022
$'000 $'000 $'000
Bank Overdraft 2,000 2,700 2,700
2,000 2,700 2,700
A repayable on demand overdraft facility of $2.7 million was entered with
FirstCaribbean International Bank (Trinidad & Tobago) Limited ("CIBC")
during 2020. The facility was increased on 5 January 2021 by $2.3 million to
a total of $5.0 million, and the additional $3.0 million remains undrawn to
date. The facility is maintained to fund working capital requirements of the
Group, particularly those arising due to the delay in receiving VAT refunds.
Details of the overdraft facility:
- Description: $5 million demand revolving credit facility
- Interest Rate: United States Prime rate (currently 9%) minus 4.05 % per
annum, with a present effective rate 4.95%, subject to a floor rate of 3.95%
- Repayment: Upon demand at CIBC's discretion
- Debenture: Floating charge debenture over Inventory and Trade Receivables
only
- Covenant: Current Ratio not less than 1.25:1
20 Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure, an alternative performance measure,
used by the Group to measure business performance. It is calculated as
Operating Profit before SPT & PT for the period, adjusted for non-cash
items being DD&A, ILFA, SOE, Fair value gain/loss on Derivatives and
Foreign exchange (gain)/loss.
The Group presents Adjusted EBITDA as it is used in assessing the Group's
operating performance as management believes it better illustrates the
underlying performance of the Group's business by excluding non-cash items not
considered by management to reflect the underlying operations of the Group.
Adjusted EBITDA is calculated as follows:
6 months to 30 June 2023 6 months to 30 June 2022 Year ended December 2022
$'000 $'000 $'000
Operating Profit Before SPT 5,828 5,351 18,971
Depreciation, depletion and amortisation 4,472 3,884 7,617
Share option expense 254 316 647
Impairment/(reversal of impairment) of financial assets (25) 45 (46)
Fair value of derivative instruments -- 3,207 (2,883)
Foreign exchange (gain)/loss (142) (41) 394
Adjusted EBITDA 10,387 12,762 24,700
$'000 $'000 $'000
Weighted average ordinary shares outstanding - basic 38,336 38,879 38,813
Weighted average ordinary shares outstanding - diluted 39,751 42,550 40,243
$ $ $
Adjusted EBITDA per share - basic 0.27 0.33 0.64
Adjusted EBITDA per share - diluted 0.26 0.30 0.61
Adjusted EBITDA after the impact of Current Taxes (SPT, PPT and UL) is
calculated as follows:
6 months to 30 June 2023 6 months to 30 June 2022 Year ended December 2022
$'000 $'000 $'000
Adjusted EBITDA 10,387 12,762 24,700
SPT (3,247) (5,049) (9,012)
PPT/UL (470) (2,882) (3,365)
Adjusted EBITDA after Current Taxes 6,670 4,831 12,323
'000 '000 '000
Weighted average ordinary shares outstanding - basic 38,336 38,879 38,813
Weighted average ordinary shares outstanding - diluted 39,751 42,550 40,243
$ $ $
Adjusted EBITDA after Current Taxes per share - basic 0.17 0.12 0.32
Adjusted EBITDA after Current Taxes per share 0.17 0.11 0.31
- diluted
21 Earnings per Share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. Diluted earnings per share is calculated using
the weighted average number of ordinary shares adjusted to assume the
conversion of all dilutive potential ordinary shares.
Profit /(Loss) $'000 Weighted Average Number Of Shares Earnings Per Share $
'000
Period ended 30 June 2023
Basic 683 38,336 0.02
Diluted 683 39,751 0.02
Period ended 30 June 2022
Basic (398) 38,879 (0.01)
Diluted (398) 38,879 (0.01)
Year ended 31 December 2022
Basic 113 38,813 0.00
Diluted 113 40,243 0.00
Impact of dilutive ordinary shares:
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The awards issued under the Company's LTIP are
considered potential ordinary shares.
The basic shares balance was amended through the net effect of the issuance of
new shares (following exercise of Options) and the repurchase of shares
through the share buyback to 30 June 2023.
22 Contingent Liabilities
i) Parent Company Guarantee:
a) PGB - A Letter of Guarantee has been established in substance over
the PGB Block where a subsidiary of Trinity is obliged to carry out a Minimum
Work Programme to the value of $8.4 million. A clause within the Letter of
Guarantee implies that the Guarantor may reduce the Guarantee Sum available
for payment to the MEEI under the Letter of Guarantee on an
obligation-by-obligation basis provided PGB delivers to the Guarantor a
certificate duly issued and signed by the MEEI.
b) Galeota - A Letter of Guarantee has been established in substance
over the Galeota Block where a subsidiary of Trinity is obliged to carry out a
Minimum Work Programme to the value of $0.9 million. A clause within the
Letter of Guarantee implies that the Guarantor may reduce the Guarantee Sum
available for payment to the MEEI under the Letter of Guarantee on an
obligation-by-obligation basis provided the subsidiary of Trinity delivers to
the Guarantor a certificate duly issued and signed by the Minister of the
MEEI. The Letter of Guarantee was effective from 14 July 2021 until the
earlier of performance of Minimum Work Programme or the Guarantor has paid the
Guaranteed amount.
ii) The Group is party to various claims and actions.
Management has considered the matters and where appropriate has obtained
external legal advice. No material additional liabilities are expected to
arise in connection with these matters, other than those already provided for
in these condensed consolidated financial statements.
23 Events after the Reporting Period
i) Subsequent to 30 June 2023, the Group received
VAT refunds of $ 1.1 million. $ 1.0 million was received in the form of VAT
bond certificates and were subsequently sold for the full amount of the VAT
bonds.
ii) On 31 December 2022, the FZ-2 Lease Operating
Agreement (LOA) expired. Trinity obtained an interim renewal of the LOA to 31
March 2023 and obtained a further extension to 30 June and September 2023 to
execute the LOA for the period 1 January 2023 to 30 September 2031. To date
of this report, we have not received formal confirmation of the renewed LOA.
iii) On 29 March 2023, the Group provided six-months'
notice to Heritage to terminate the sub-licence Farm-Out agreement for the
Tabaquite block, which is due to be relinquished by 29 September 2023. This
decision was based on the terms of the new sub-licencee requirements proposed
to the Group which makes this sub-licence uneconomic for Trinity to operate.
iv) The Jacobin-1 well was spudded on 15 May 2023 with
an objective to appraise and explore the potential of Lower Cruse sandstones
within the Palo Seco area of the prolific Southern Basin. On 7 August 2023,
Jacobin-1 was successfully drilled to a total depth of 10,021 feet and is one
of the deepest wells drilled in recent times within the prolific Palo Seco
area, onshore Trinidad. Over 290 feet of net oil pay was encountered
including 63 feet of net oil pay in the deeper exploration targets. A
comprehensive logging and pressure sampling programme has confirmed virgin
pressures in these deeper zones and results validate the geological model and
are within pre-drill range for a commercial discovery. The well has been
cased to 10,021 feet and is being prepared for a series of production tests
that is likely to commence with the deepest oil-bearing reservoir, and first
production is expected during September 2023.
v) On 21 August 2023, the Company announced
that 565,000 options had been granted under the LTIP in respect of the
Company's performance in the year to 31 December 2022 (the "2022 LTIP Award"),
including 100,000 options granted to Jeremy Bridglalsingh, Chief Executive
Officer, 175,000 options granted to Julian Kennedy, Chief Financial Officer,
(CFO) (of which 100,000 are one-off options granted on joining the Board), and
100,000 one-off options granted to the new Chief Operating Officer, (COO) who
joined earlier this year. The 2022 Annual LTIP Award represents 1.42 % of
the Company's current issued share capital. Excluding the one-off options
issued to the CFO and COO concerning their appointments, the 2022 Annual LTIP
Award represents 0.91 per cent of the current issued share capital of the
Company.
vi) On 13 June 2023, Trinity announced its successful bid
for the onshore Buenos Ayres block. Subsequent to H1 2023, we are still
awaiting finalisation of the exploration and production licence with the MEEI.
vii) On 25 August 2023, the Group agreed an upsized credit
facility providing for an increase of the facility from $ 5.0 million to $ 8.0
million.
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