Trinity Exploration - Q3 2023 Operational Update
23/10/2023 07:00
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RNS Number : 8840Q Trinity Exploration & Production 23 October 2023
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23 October 2023
Trinity Exploration & Production plc
("Trinity" or "the Group" or "the Company")
Q3 2023 Operational Update
Trinity Exploration & Production plc (AIM: TRIN), the independent E&P
company focused on Trinidad and Tobago, provides an update on operations for
the three-month period ended 30 September 2023 ("Q3 2023" or "the
Period"). The information contained herein has not been audited and may be
subject to further review and amendment.
Jacobin-1 Discovery
Following the Jacobin oil discovery in the Palo Seco area onshore Trinidad,
announced on 7 August 2023, the well was cased to 10,021 feet in preparation
for production testing.
A heavy-duty workover rig, Rigtech Rig #9, mobilised to the wellsite and
perforated the lower-most of three oil-bearing zones on 30 September 2023.
The well came on at an encouraging rate during the initial clean-up phase but
in doing so produced sand which has temporarily plugged the well. We
recovered a high quality, light oil (35(o) API) from this lower reservoir.
The reservoir and wellhead pressures, in addition to the rate achieved, are
highly encouraging and we continue with operations to bring on production from
this deep and highly pressurised reservoir.
The well flowed a total of 113 barrels (34 bbls oil and 79 bbls completion
fluid) over a seven-hour period prior to a sand plug forming in the well. If
sustained, this would be a highly encouraging result however the period is too
limited to provide a reliable indication of the potential production flow
rates from this zone.
The post-perforation closed-in wellhead pressure was 2250psi, which matches
our pre-perforation expected pressures based on a reservoir pressure of
7500psi. Flowing pressure on 4/32" choke was 1800psi.
Trinity is deploying a coiled-tubing unit to clean-out the well and bring it
back into production. We expect work to unplug the well to be followed by a
period of production optimisation as we adjust the choke to achieve sustained
flow.
Trinity plans to carry out extensive testing of all three discovered
oil-bearing horizons in the deeper exploration section of Jacobin to establish
reliable and meaningful data over an extended period. The Company will
provide details of the flow test data when this information is available.
The oil produced was sold to Heritage Petroleum Company Limited under the
current sales arrangement within the PS4 Lease Operating Agreement.
Given that the well has taken longer to drill and the well testing programme
now contemplates three zones, we expect that the total cost for drilling,
completion and testing will exceed the previously guided capital expenditure
ranges for Jacobin. A final update on the costs associated with Jacobin,
will be provided once finalised.
Q3 2023 Operational Highlights
· Q3 2023 sales volumes averaged 2,705 bopd (Q2 2023: 2,824 bopd).
Production was lower than planned over the quarter due to extended downtime on
a key well in the Trintes field which is now back online.
· Production Sales Guidance for the full year 2023 is updated to
2,800 bopd - 2,900 bopd (previously 2,800 - 3,100 bopd).
Annual and Quarterly Sales by Region
12m 2022 Q1 2023 Q2 2023 Q3 2023
Onshore 1,655 1,548 1,477 1,493
East Coast 1,051 1,038 985 843
West Coast 269 314 362 370
Total 2,975 2,899 2,824 2,705
· During Q3 2023:
- 37 workovers (Q2 2023: 16; Q3 2022: 32) were completed.
- there were no recompletions ("RCPs") in the Period (Q2 2023: 1;
Q3 2022: 5).
- swabbing operations continued across onshore and West Coast
assets.
Q3 2023 Financial Highlights
The Group reports its consolidated financial information half yearly, in its
Annual Report & Accounts and Interim Results, in accordance with UK
adopted International Accounting Standards and the London Stock Exchange's AIM
Rules for Companies. Quarterly, the Company provides unaudited information
for guidance.
· Average realisation of USD 72.5/bbl for Q3 2023
(Q2 2023: USD 63.7/bbl, Q3 2022: USD 84.3/bbl).
· EBITDA, pre-hedging(1), in Q3 2023 of USD 4.6 million (unaudited)
(Q2 2023: USD 4.5 million (unaudited); Q3 2022 USD 8.7 million).
· Operating break-even(2), pre-hedging(1), Q3 2023 of USD 42.27/bbl
(Q2 2023 of USD 34.8/bbl; Q3 2022 USD 32.2/bbl). This increased Q3
operating break-even is due mainly to lower Q3 sales volumes and this is
expected to be temporary.
(1) The Company has no hedging in place in 2023.
(2) Operating break-even is the realised price/bbl where the
adjusted EBITDA/bbl for the Group is equal to zero.
· Cash balance of USD 8.4 million (unaudited) at 30 September 2023
versus USD 11.3 million (unaudited) at 30 June 2023 and USD 16.5 million
(unaudited) at 30 September 2022.
· The Group had drawn borrowings (overdraft) of USD 2.0 million at
30 September 2023 (USD 2.0 million at 30 June 2023 and USD 2.7 million
at 30 September 2022).
Outlook
Galeota Concept Screening Study
Trinity commissioned Petrofac to undertake a study to take a fresh look at
development concepts for the Galeota Block, using the latest subsurface
information and marrying that with Petrofac's global low-cost marginal field
track record to develop a concept that can be taken forward into Conceptual
Engineering, Front End Engineering and Project Sanction.
The study has been completed and has helped to confirm that lower capital
intensity projects, when compared to the previous 'Echo' Field Development
Plan, are feasible and should result in lowering both the risk and quantum of
up-front capital required to exploit the significant reserves and resources in
Galeota. The Company is conducting scoping economic analyses of the key
recommended options. An update will be provided in due course within the
Company's next Corporate Presentation.
Fiscal Changes
On 2 October 2023, the Government of Trinidad and Tobago's 2023 Budget
Statement announced proposed reforms to the Supplemental Petroleum Tax ("SPT")
regime for shallow marine areas similar to reforms that have been made
previously to onshore activities. In addition, the proposed review of the
capital expenditure write-off regime, seems intended to be in favour of
operators such as Trinity. The Statement also included a proposal to
increase the Sustainability Allowance from 20% to 25%.
The proposed SPT changes, which are subject to further definition through the
legislative process and Parliamentary ratification, will meaningfully improve
the economics and value of the Company's East Coast and West Coast shallow
marine licences.
Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:
"During the period, we made significant progress at our important Jacobin
well, perforating the lower-most of three oil-bearing zones on 30 September.
We had encouraging flow during the initial clean-up phase but, in doing so,
produced sand which has temporarily plugged the well. Work to resolve that
issue is in train. The oil quality and pressure in the well are very
positive.
The results of the Galeota concept screening study have served to help
validate our approach to reducing the capital intensity of projects that will
help to improve economics, which will be further improved by the recently
proposed changes to SPT.
I look forward to providing a further update on our progress on Jacobin, which
is of paramount importance to our shareholders, as we progress our well
testing programme."
Enquiries:
Trinity Exploration & Production plc Via Vigo Consulting
Jeremy Bridglalsingh, Chief Executive Officer
Julian Kennedy, Chief Financial Officer
Nick Clayton, Non- Executive Chairman
SPARK Advisory Partners Limited +44 (0)20 3368 3550
(Nominated Adviser and Financial Adviser)
Mark Brady
James Keeshan
Cavendish Securities plc (Broker) +44 (0)20 7397 8900
Leif Powis +44 (0)131 220 6939
Derrick Lee
Neil McDonald
Vigo Consulting Limited trinity@vigoconsulting.com
Finlay Thomson +44 (0)20 7390 0230
Patrick d'Ancona
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.
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