Trinity Exploration - Q4 2022 Operational Update
30/01/2023 07:00
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RNS Number : 1753O Trinity Exploration & Production 30 January 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 considered to be in the public domain.
30 January 2023
Trinity Exploration & Production plc
("Trinity" or "the Group" or "the Company")
Q4 2022 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 31 December 2022 ("Q4 2022" or "the
Period"). The information contained herein has not been audited and may be
subject to further review and amendment.
Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:
"Trinity delivered a robust operating performance in 2022 which continues to
highlight the strength and resilience of our core business.
We delivered production for the year within guidance and we remain on-track to
progress our growth agenda in 2023. We submitted an application in the 2022
Onshore and Nearshore Competitive Bid Round in January, we expect to have the
reactivation of ABM-151 onstream in February and we continue to target further
impactful wells, the most exciting of which is our proposed deep onshore well
on the Jacobin prospect. These are the first near-term growth catalysts we
are pursuing, as we unlock the value in our portfolio. Coupled with that,
our programme of share buybacks reinforces our focus on creating and returning
value to our shareholders.
Trinity is pleased to have bid for the Buenos Ayres block as part of the 2022
Onshore and Nearshore Competitive Bid Round. Following-on from the positive
fiscal changes announced on 26 September 2022, the success of this licensing
round demonstrates that the Government is focused on stimulating the energy
sector which we expect will continue to provide additional growth
opportunities for Trinity."
Q4 2022 Operational Highlights
· The Company maintained solid production performance over the year in
line with guidance:
- Q4 2022 sales volumes averaged 2,961 bopd (Q3 2022: 2,990 bopd).
- Full year 2022 sales volumes totalled 2,975 bopd (2021: 3,006
bopd).
· The Company maintained year-on-year production through a combination
of workovers, recompletion activities and swabbing.
- During Q4, 1 recompletion ("RCP") (Q3 2022: 3) and 27 workovers
(Q3 2022: 35) were completed, with swabbing operations continuing across
onshore and West Coast assets.
- A total of 19 RCPs and 117 workovers were completed during 2022
(2021: 7 RCPs and 96 workovers).
· The third well of the 2022 onshore drilling campaign was completed
and brought into production in the Period.
· Initial production levels for the three wells drilled in 2022 were on
prognosis but subsequent performance is lower than planned. Each well
drilled penetrated multiple oil-bearing horizons but is being produced
currently from only a single interval. Trinity's normal operating practice
is to recomplete these wells sequentially in different productive horizons, or
to complete multiple zones, which may improve and extend production levels in
due course.
· 31 Tier 1 onshore wells are fully automated resulting in increased
cost savings from reduced manual interventions and workover preventions.
Q4 2022 Financial Highlights
· Average realisation of US$ 75.4/bbl for Q4 2022 (Q3
2022: US$ 84.3/bbl) yielding a full year 2022 average of US$ 84.9/bbl (FY
2021: US$ 60.4/bbl).
· Operating cash flow pre-tax and pre-hedging of:
- Q4 2022 US$ 5.5 million (unaudited) (Q3 2022:
US$ 8.6 million).
- FY 2022 US$ 26.5 million (unaudited) (FY 2021: US$ 20.5 million).
· Low operating break-even(1), pre-hedging, Q4 2022 US$ 31.4/bbl (Q3
2022: US$ 32.2/bbl) and US$ 31.9/bbl (unaudited) for the full year 2022
(2021: US$ 29.2/bbl).
· Cash balance of US$ 12.1 million (unaudited) as at 31 December
2022 versus US$ 18.3 million (audited) as at 31 December 2021 and
US$ 16.5 million (unaudited) as at 30 September 2022.
· Completion of the share buyback programme announced on 20 September
2022 with 672,000 shares repurchased (1.7% of the Company's shares in issue)
for US$ 1.0 million.
A further US$ 1.0 million buyback was announced on 24 October 2022 and,
during the Period, the Company repurchased an additional 400,000 shares (1.0%
of the Company's shares in issue) for US$ 0.53 million.
The buyback programme is ongoing. A further 152,000 shares have been
repurchased during January 2023 (0.4% of the Company's shares in issue). The
total number of shares held in Treasury at 30 January 2023 is 1,224,000 (3.1%
of the Company's shares in issue).
(1) Operating break-even is the realised price/bbl where the
adjusted EBITDA/bbl for the Group is equal to zero.
Outlook
Hedging Position
The company incurred substantial hedging costs in 2022 as a consequence of
high oil prices following the Russian invasion of Ukraine. Those hedging
instruments gradually unwound over the course of 2022, and from 1 January 2023
the Company has no hedging instruments in place. The total cash cost of the
hedging programme in 2022 was US$ 10.4 million.
The Company believes that hedging remains a valuable component of its risk
management toolkit and will continually monitor the oil price environment
alongside its financial commitments to determine any future hedging strategy.
Fiscal Reforms
The Government of Trinidad and Tobago's 2023 Budget Statement announced
reforms to Supplemental Petroleum Tax and Investment Tax Credit. These were
assented to in the Finance (No. 2) Act, 2022 on 20 December 2022. The
benefit to Trinity's cash flow, at a Brent oil price of US$ 80/bbl, is
estimated to be in the order of US$ 2.5 million per annum for the existing
business. In addition, new oil wells in shallow water marine areas (the
definition of which covers Trinity's East Coast and West Coast assets),
whether in existing fields or new fields, will benefit from lower Supplemental
Petroleum Tax rates. We await the legislation which will allow us to
calibrate the economic uplift associated with this amelioration.
East Coast - Galeota
The Company is progressing its assessment of alternative development concepts
for the Galeota licence on the East Coast, taking account of the fiscal
reforms introduced for new shallow marine wells. This includes acceleration
of production of existing 2P reserves from the Trintes field. On completion
of this work the Company may re-engage with counterparties that participated
in a farmout process in 2022.
West Coast - ABM-151
The Company has been progressing a reactivation programme for a key West Coast
well, ABM-151, involving the installation of a new crow's nest and boat
landing, together with remote surveillance technology. Final approvals are
being sought to introduce hydrocarbons into the system which is anticipated in
February 2023 at an expected rate ranging between 60-110 bopd.
2022 Onshore and Nearshore Competitive Bid Round
On 9 January 2023 Trinity submitted a bid for the Buenos Ayres block in the
2022 Onshore and Nearshore Competitive Bid Round conducted by the Government
of Trinidad and Tobago Ministry of Energy and Energy Industries ("MEEI") which
had been launched on 8 July 2022.
At a bid round closing ceremony on 9 January 2023, the MEEI opened sixteen
bids covering eight of the eleven blocks offered in the bid round, of which
two (Trinity's and one other) were for the Buenos Ayres block. Successful
bids are expected to be announced three months following the close of the bid
round.
Buenos Ayres is located immediately to the west of Trinity's existing Palo
Seco area interests with Blocks WD-5/6, WD-2 and PS-4 and, at its closest, is
only around 500 metres from the Company's existing sub-licences. This
proximity, together with Trinity's advanced technical understanding of the
area's stratigraphy from the 2020 purchase and subsequent integration and
mapping of the Palo Seco and NWD 3D seismic datasets, gives the Company
confidence that it has submitted a highly credible and attractive application
to the MEEI.
Drilling Update
On 26 January 2023, Trinity announced that it is progressing to drill the deep
"Jacobin" well in the WD-5/6 area. The well will test a structural prospect
defined on 3D seismic, with target reservoirs of Lower Cruse Miocene-age
turbidite sandstones. The well will also intersect multiple shallower
stacked reservoir targets.
A successful well would unlock both a further development of Jacobin and
follow-on drill-ready prospects and mapped leads both on existing acreage and
the Buenos Ayres block.
In Q4 2022, the Company placed an order for the specialist drilling tool
required for the planned horizontal well. That tool is being manufactured
specifically for Trinity with a delivery date during Q2 2023.
Cyber Incident
The Company was the subject of a sophisticated cyber incident in December 2022
and immediately took precautionary measures to protect its IT infrastructure
and engaged with external specialists to investigate the nature and extent of
the incident and implement its systems recovery plan. Trinity moved quickly
to notify relevant regulators and law enforcement agencies.
Trinity's production facilities continued to operate safely throughout and the
Company expects the impact on the business to be minimal.
Trinity's IT team and its external advisers continue to support the business
in returning its administrative systems to full capacity incorporating
learnings from the incident and embedding more resilient IT infrastructure,
cyber security systems and procedures.
Enquiries:
Trinity Exploration & Production plc Via Vigo Consulting (mailto:trinity@vigoconsulting.com)
Nick Clayton, Non- Executive Chairman
Jeremy Bridglalsingh, Chief Executive Officer
Julian Kennedy, Chief Financial Officer
SPARK Advisory Partners Limited +44 (0)20 3368 3550
(Nominated Adviser and Financial Adviser)
Mark Brady
James Keeshan
Cenkos Securities PLC (Broker) +44 (0)20 7397 8900
Leif Powis +44 (0)131 220 6939
Neil McDonald
Vigo Consulting Limited trinity@vigoconsulting.com
Finlay Thomson / Patrick d'Ancona +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 2021
was 19.73 mmbbls. Group 2C contingent resources are estimated to be 47.22
mmbbls. The Group's overall 2P plus 2C volumes are therefore 66.95 mmbbls.
Trinity is quoted on AIM, a market operated and regulated by the London Stock
Exchange Plc, under the ticker TRIN.
Competent Person's Statement
All reserves and resources related information contained in this announcement
has been reviewed and approved by Dr. Ryan Ramsook, Trinity's Executive
Manager, Exploration. Dr. Ramsook is also a Senior Lecturer at the University
of the West Indies and Fellow of the Geological Society (FGS) of London. He is
a Geologist by background with 18+ years' experience.
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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