TIDMTRIN
RNS Number : 4721A
Trinity Exploration & Production
29 September 2015
Trinity Exploration & Production Plc
(the "Company" or "Trinity"; AIM:TRIN)
Interim Results
29(th) September 2015
Trinity, an independent E&P company focused on Trinidad and
Tobago, announces its interim results for the six months ended 30th
June 2015.
Operating highlights
-- Group average net production levels of 3,085 boepd for H1
2015 (H1 2014: 3,795 boepd)
-- Net Q2 production averaged 2,939 boepd
-- Continued progress made towards TGAL Field Development Plan
("FDP")
-- 45% reduction in General and Administrative ("G&A") costs
year-on-year to USD 5.7 million for H1 2015
-- Further G&A reductions post period end to take run rate
down by an additional USD1.6 million per annum
-- Development and exploration activities currently
suspended
Financial highlights
-- Trinity benefited from not being subject to Supplemental
Petroleum Taxes ("SPT") when the WTI oil price fell below USD
50.0/bbl
-- Revenues of USD 27.8 million (H1 2014: USD 62.3 million)
-- Reduced operating costs by 36% at USD 12.0 million (H1
2014:USD 18.7 million)
-- Impairment of USD 6.1 million pre acquisition costs to date
on Blocks 1(a) & 1(b)
-- EBITDA before exceptional items/ exploration costs written
off of USD 1.6 million (H1 2014: USD 12.5 million)
-- Operating loss before exceptional items/ exploration costs
write off of USD 1.3 million (H1 2014 : USD 3.8 million profit)
-- Cash outflow from operating activities USD 1.1 million (H1
2014 : USD 4.4 million inflow)
-- Net loss after tax of USD 15.8 million (H1 2014:USD 22.9
million)
-- Cash balance at period end of USD 8.2 million (H1 2014: 9.6
million)
-- Current extension for moratorium on principal repayments
relating to Trinity's outstanding debt extended to 9th October
2015
Strategic highlights
-- Trinity is currently conducting a strategic review of its
business in order to maximise value for shareholders. The Company
is subject to The City Code on Takeovers and Mergers and has opted
to conduct discussions with parties interested in making a proposal
to the Company under the framework for a "Formal Sales Process"
(FSP) of its assets
-- Post the period end, Trinity announced the sale of the
Company's 100% interest in the Guapo-1 block for a cash
consideration of USD 2.8 million, against a book value of USD 2.2
million. Proceeds from the sale will be used to service the
Company's senior debt
-- Trinity has been unable to extend the term of its agreement
to complete the purchase of 80% interest in Blocks 1(a) & 1(b)
from Centrica. Consequently, the Sale and Purchase Agreement
("SPA") between Trinity and two subsidiaries of Centrica was
terminated
-- The Tabaquite block, is currently classified as
'held-for-sale' with no proceeds as yet having been received from
LGO Energy plc ("LGO") despite signature of a binding Sale and
Purchase Agreement ("SPA") to acquire 100% of the issued shares of
Tabaquite Exploration & Production Company Limited ("TEPCL")
from Trinity for a total consideration of USD 2.0 million. Trinity
is yet to receive monies due under the SPA. The company is working
hard to bring this matter to a satisfactory conclusion.
Outlook
Key priorities for the Company are to:
-- Achieve a c. 20% reduction in full year production operating
expenditure to USD 26.0 million
-- Submission of the TGAL draft FDP
-- Identify and arrange financing to fund the Company's future
developments
Further to the strategic review and FSP that we announced in
April, Trinity is in discussions with a number of parties. Trinity
Shareholders are advised that there can be no certainty that any
offer or other transaction will result from the formal sales
process or as to the terms on which any offer or other transaction
may be made.
Discussion with the Group's bankers is ongoing and, under the
assumption that the Group's remaining external debt is not recalled
following expiry of the current moratorium on 9th October 2015, the
Group has sufficient cash flow to continue operating for at least
the next 12 months from the date of approval of these financial
statements and the Board of Directors continues to adopt the going
concern basis of preparing the financial statements (see note
1).
Joel "Monty" Pemberton, Chief Executive Officer of Trinity,
commented:
"We remain on track to reduce our operating costs by 20% this
year and have made good progress in cutting G&A by 45% for the
half year with further reductions post the period end. Despite the
significantly reduced levels of capital expenditure our production
levels have held up well, reflecting the robust nature of the asset
base.
We continue to explore all of the options for our business to
ensure we can maximise value for our shareholders. The SPA agreed
on the Guapo-1 block demonstrates the on-going attractiveness of
Trinity's portfolio. The FSP process remains competitive, with
discussions ongoing with several interested parties, and we look
forward to announcing additional news on the strategic review and
FSP in due course.
At oil prices below US$50/bbl we do not pay SPT which in
conjunction with on-going operational efficiencies and cost cutting
enhances our production economics and the value of Trinity's
portfolio."
Competent Person's Statement
The information contained in this Circular has been reviewed and
approved by Dr Ryan Ramsook, the Company's Head of Sub Surface, who
has 10 years of relevant experience in the oil industry. Dr Ramsook
holds a PhD in Geology.
Enquiries
Trinity Exploration & Production Tel: +44 (0)13 1240
Joel "Monty" Pemberton, Chief Executive 3860
Officer
Tracy Mackenzie, Head of Investor Relations
RBC Capital Markets (NOMAD & Broker) Tel: +44 (0) 20 7653
Matthew Coakes 4000
Daniel Conti
Oil & Gas Advisory Tel: +44 (0) 20 7653
Jakub Brogowski 4000
Roland Symonds
Brunswick Group LLP (PR Adviser) Tel: +44 (0) 20 7404
Patrick Handley 5959
William Medvei
About Trinity
Trinity is the largest independent E&P company focused on
Trinidad and Tobago. Trinity operates assets onshore and offshore
on both the West and East coasts. 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 licences
and has 2P reserves of 25 mmbbl. Trinity is listed on the AIM
market of the London Stock Exchange under the ticker TRIN.LN
OPERATIONS REVIEW
During the second quarter, Trinity's net production averaged
2,939 boepd, an average of 3,085 boepd for the first half of
2015.
Onshore operations
Average H1 2015 net production for Onshore was 1,691 boepd (H1
2014: 2,088 boepd). The decrease in production volumes resulted
from natural decline rates coupled with minimal workover activity.
There were 43 workovers conducted in H1, with the rate of workovers
limited by having only two rigs operational on the fields (versus
the three previously operational for the same period last year).
Due to lower oil prices new drilling operations have been suspended
since the close of H1 2014 and this has remained in effect. One RCP
was completed in H1 2015 yielding an initial production rate of 104
boepd partially offsetting the decline in production.
West Coast operations
Average H1 2015 net production from the West Coast assets was
384 boepd (H1 2014: 580 boepd). No drilling or RCPs were carried
out in H1 2015 and there were minimal workover activities. The
shortfall in West Coast production levels was largely due to the
temporary shut-in of the ABM-151 well (now back on production) and
compressor overhaul work at Brighton. At the Guapo Marine block
chemical treatment of some of the more viscous wells has been
deferred.
East Coast operations
At TGAL (TRIN: 65% WI), where management resource estimates on
Trinity's TGAL-1 discovery are 150.0 - 210.0 mmbbls (best estimate
186.0 mmbbls), work continues on the Field Development Plan with
submission expected during H2 2015. The subsurface evaluation has
been completed, the topside facility concept has been narrowed down
to two options and it seems practical to adopt a phased approach to
developing the field by bringing onto production the reserves
nearer to the Trintes field and putting it through a Trintes
facility to shore. Seventeen candidate drilling locations have been
identified with the potential to develop 22.0 mmbbls following
development. The initial revenues generated would then allow for
reinvestment in other facilities and pipeline.
FINANCIAL REVIEW
Income Statement Analysis
Trinity's financial results for the first half of 2015 showed a
Total Comprehensive Loss of USD 15.8 million (H1 2014: USD 22.8
million) on gross revenues of USD 27.8 million (H1 2014: USD 62.3
million).
Operating Revenues
Operating revenues of USD 27.8 million (H1 2014: USD 62.3
million). This 55% decrease was mainly attributable to (i) sharp
fall in oil prices, (ii) decreased production and (iii) suspension
of drilling operations across all assets.
-- Crude oil prices: Trinity was adversely affected from low oil
prices during the first half of 2015, with an average West Texas
Intermediate ("WTI") realised price of USD 49.5/bbl (H1 2014: USD
93.0/bbl)
-- Production: The group's average production for the six month
period was 3,085 boepd (H1 2014: 3,795 boepd) with 55% (1,691 bopd)
sold onshore, 12% (384 boepd) attributable to the West Coast and
33% (1,010 bopd) from the East Coast
Operating Expenses
Operating expenses of USD 29.1 million (H1 2014: USD 58.5
million) comprised of the following:
-- Royalties of USD 8.6 million (H1 2014: USD 20.7 million)
decreased due to lower oil prices
(MORE TO FOLLOW) Dow Jones Newswires
September 29, 2015 02:02 ET (06:02 GMT)
-- Production costs of USD 12.0 million (H1 2014: USD 18.7
million). The group adopted strategic and proactive measures to
reduce the production costs and bring it in line with current oil
prices
-- Depreciation, depletion and amortisation charges of USD 2.9
million (H1 2014: USD 8.7 million) were lower as the depreciable
asset pool was reduced due to asset impairment
-- General and administrative (G&A) expenditure of USD 5.7
million (H1 2014: USD 10.4 million). The favourable variance
reported in H1 2015 compared to H1 2014 is a result of reduced head
office charges due to organizational restructuring, reduced
overseas travel, only essential consultancy and professional fees
and lower business development and marketing expenditure
Operating Loss
Operating loss (before exceptional items) for the period
amounted to USD 1.3 million (H1 2014: USD 3.8 million profit)
mainly driven by fall in crude oil prices
Net Finance Costs
Finance costs for the period totalled USD 3.4 million (H1 2014:
USD 2.3 million) of which USD 0.6 million (H1 2014: USD 1.7
million) related to interest expense on loan facilities from
Citibank (Trinidad & Tobago) Limited, USD 1.6 million interest
on taxes and USD 0.4 million interest due to Centrica for 1(a)
& 1(b)
In addition, USD 0.8 million (H1 2014: USD 0.6 million) related
to the unwinding of the discount rate on the decommissioning
provision.
Taxation
The Group has a deferred tax asset of $27.6 million on its
Statement of Financial Position which it expects to recover in more
than 12 months based on the expected taxable profits generated by
Group companies.
For the first half of 2015 taxes amounted to USD 2.8 million (H1
2014: USD 7.0 million) which comprised of:
-- Production taxes which amounted to USD 2.1 million (H1 2014:
USD 10.3 million)
- PPT: USD 0.04 million (H1 2014: USD 3.2 million)
- SPT: USD 2.1 million (H1 2014: USD 7.1 million)
-- Other taxes:
- Corporation tax of USD 0.7 million (H1 2014: USD 0.7 million)
The total outstanding taxation balances at the end of H1 2015
stands at USD 22.9 million with minimum payments made in H1 2015.
Further payments are expected in H2 2015 once funding becomes
available through the realisation of the FSP. Trinity benefited
from not being subject to Supplemental Petroleum Taxes ("SPT") when
the WTI oil price fell below USD 50.0/bbl.
Total Comprehensive Income
Trinity recorded a Total Comprehensive Loss of USD 15.8 million
(H1 2014: USD 22.8 million) for the period ending 30th June 2015.
Adjusted for exceptional items, Trinity recorded Total
Comprehensive Loss of USD 7.5 million (H1 2014: USD 5.3
million).
Cash Flow Analysis
Initial Cash Position
Trinity started the year with an initial cash balance of USD
33.1 million (2014 USD 25.1 million).
Cash from Operating Activities
For the period ending 30th June 2015, Trinity's net cash outflow
was USD 1.1 million (H1 2014: USD 4.4 million inflow) of cash from
operating activities.
Changes in Working Capital
During the period Trinity experienced working capital outflows
of USD 1.1 million (H1 2014: USD 9.1 million) which was
substantially affected by payments for exploration drilling
activities, but compensated by VAT collection. Significant changes
are outlined in the table below.
All figures in USD'000 H1 2015 H1 2014
Uses of Cash Sources of Uses of Sources of
Cash Cash Cash
Inventory 5,238 405
Assets held-for-sale 104
Trade and other receivables 3,557 7,074
Trade and other payables 3,696 10,448
Taxation Paid 53 4,654
Change in Working
Capital (1,964) (8,433)
Trinity paid taxes of USD 0.05 million (comprising production
and corporate taxes) in the first half of 2015 (H1 2014: USD 4.7
million of which USD 4.0 million related to production taxes for
2013).
Investing Activities
For the first half of 2015, Trinity incurred capital
expenditures of USD 1.2 million (H1 2014: USD 21.3 million)
comprising exploration and evaluation assets of USD 1.1 million (H1
2014: USD 8.5 million) and property, plant and equipment acquired
for USD 0.1million (H1 2014: USD 12.8 million).
Financing Activities
-- Trinity made principal repayments totaling USD 20.0 million
(H1 2014: USD 2.0 million) on its Citibank (Trinidad & Tobago)
Limited USD 25.0 million loan facility in February 2015
-- Finance costs amounted to USD 2.5 million (H1 2014: USD 1.7 million)
Closing Cash Balance
Trinity's cash balances at 30th June 2015 were USD 8.2 million
(H1 2014: USD 9.6 million).
Bruce Dingwall Joel "Monty" Pemberton
Non-Executive Chairman Chief Executive Officer
STATEMENT OF DIRECTORS' RESPONSIBILITY
The directors' confirm that this condensed consolidated interim
financial information has been prepared in accordance with IAS 34
as adopted by the European Union and that the interim management
report includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six 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 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
Joel Pemberton
Chief Executive Officer
INDEPENDENT REVIEW REPORT TO TRINITY EXPLORATION &
PRODUCTION PLC
Introduction
We have been engaged by the company to review the condensed
consolidated interim financial statements in the half-yearly
financial report for the six months ended 30th June 2015, which
comprises the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated
statement of changes in equity, consolidated cash flow statement
and related notes. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules for Companies which require that the financial
information must be presented and prepared in a form consistent
with that which will be adopted in the company's annual financial
statements.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of the AIM Rules for Companies and for no other purpose. We
do not, in producing this report, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. 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 Ireland) 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.
Emphasis of Matter
In forming our conclusion on the condensed consolidated
financial statements, which is not modified, we have considered the
adequacy of the disclosure made in note 1 to the condensed
consolidated financial statements concerning the Group and
Company's ability to continue as a going concern.
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September 29, 2015 02:02 ET (06:02 GMT)
The Directors have commenced a formal sales process and as at
the date of approving the condensed consolidated financial
statements, certain asset deals have been executed and a number of
conditional proposals and expressions of interest had been received
but not concluded. The directors recognise that the Group and
Company have insufficient financial resources to operate the
business in the longer term in the absence of additional funding.
They believe, however, that there are reasonable future prospects
for a transaction to be completed. However, there is uncertainty as
to the ability to secure the additional funding required.
These conditions, along with the other matters explained in
note1 to the condensed consolidated financial statements, indicate
the existence of a material uncertainty which may cast significant
doubt about the Group's and Company's ability to continue as a
going concern. The condensed consolidated financial statements do
not include the adjustments that would result if the Group and
Company were unable to continue as a going concern.
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 30th
June 2015 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the AIM Rules for Companies.
PricewaterhouseCoopers LLP
Chartered Accountants
Aberdeen
28th September 2015
The maintenance and integrity of the Trinity Exploration &
Production Plc website is the responsibility of the directors; the
work carried out by the auditors does not involve consideration of
these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the
website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Trinity Exploration & Production Plc
Condensed Consolidated Interim Financial Statements
For the period ended 30th June 2015
Trinity Exploration & Production Plc
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30th June 2015
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30th June to 30th June December
2015 2014 2014
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Revenues
Crude oil sales 27,752 62,240 113,319
Other income 66 41 144
-------------- -------------- ------------
27,818 62,281 113,463
Operating Expenses
Royalties (8,585) (20,688) (36,980)
Production costs (11,963) (18,663) (32,931)
Depreciation, depletion and amortisation 6 (2,897) (8,706) (16,335)
General and administrative expenses (5,678) (10,442) (15,019)
-------------- -------------- ------------
(29,123) (58,499) (101,265)
-------------- -------------- ------------
Operating (Loss)/Profit (1,305) 3,782 12,198
Exceptional items 4 (8,289) -- (120,939)
Exploration cost write off -- (17,463) (14,929)
Finance Income 1 2 33
Finance Costs (3,405) (2,260) (5,151)
--------------
Loss Before Taxation (12,998) (15,939) (128,789)
Taxation Charge 5 (2,846) (7,005) (12,657)
-------------- -------------- ------------
Loss for the period (15,844) (22,944) (141,446)
Other Comprehensive Income
Currency Translation 24 107 263
-------------- -------------- ------------
Total Comprehensive Loss for the
period (15,820) (22,837) (141,183)
============== ============== ============
Earnings per share (expressed
in dollars per share)
Basic 14 (0.17) (0.24) (1.49)
Diluted 14 (0.17) (0.24) (1.49)
------------------------------- ---
Trinity Exploration & Production Plc
Condensed Consolidated Statement of Financial Position
for the period ended 30th June 2015
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------
Notes As at 30th As at 30th As at 31st
June 2015 June 2014 December 2014
ASSETS $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current Assets
Property, plant and equipment 6 48,722 181,703 85,655
Intangible assets 7 26,805 50,024 25,676
Deferred tax asset 27,630 80,344 27,630
------------ ------------ ---------------
103,157 312,071 138,961
------------ ------------ ---------------
Current Assets
Inventories 11 6,671 12,434 11,909
Trade and other receivables 18,361 29,716 21,990
Assets held-for-sale 12 34,691 -- 672
Taxation recoverable 548 540 548
Cash and cash equivalents 8,197 9,594 33,084
------------ ------------ ---------------
68,468 52,284 68,203
------------ ------------ ---------------
Total Assets 171,625 364,355 207,164
============ ============ ===============
Equity
Capital and Reserves Attributable
to Equity Holders
Share capital 8 94,800 94,800 94,800
Share premium 8 116,395 116,395 116,395
Share warrants 71 71 71
Share based payment reserve 12,006 11,774 11,834
Reverse acquisition reserve (89,268) (89,268) (89,268)
Merger reserves 75,467 74,808 75,467
Translation reserve 287 674 527
Accumulated (deficit) (146,914) (12,569) (131,070)
------------ ------------ ---------------
Total Equity 62,844 196,685 78,756
Non-current Liabilities
Borrowings 9 -- 12,889 --
Provision for other liabilities 10 19,255 29,599 39,775
Deferred tax liability 3,751 58,030 3,778
------------ ------------ ---------------
23,006 100,518 43,553
------------ ------------ ---------------
Current Liabilities
Trade and other payables 28,547 50,669 33,374
Borrowings 9 13,000 6,000 33,000
Liabilities held-for-sale 12 21,286 -- --
Taxation payable 22,942 10,483 18,481
------------
85,775 67,152 84,855
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September 29, 2015 02:02 ET (06:02 GMT)
------------ ------------ ---------------
Total Liabilities 108,781 167,670 128,408
------------ ------------ ---------------
Total Shareholders' Equity and
Liabilities 171,625 364,355 207,164
============ ============ ===============
Trinity Exploration & Production Plc
Condensed Consolidated Statement of Changes in Equity
for the period ended 30th June 2015
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------------------------------------
Share Share Share Share Reverse Merger Translation Accumulated Total
Capital Premium Warrant Based Acquisition Reserve Reserve Deficit
Payment Reserve
Reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------- -------- -------- -------- ------------ -------- ------------ ------------ ----------
Balance at
30th June
2014
(unaudited) 94,800 116,395 71 11,774 (89,268) 74,808 674 (12,569) 196,685
Share based
payment
charge -- -- -- (88) -- -- -- -- (88)
Translation
difference -- -- -- 148 -- 659 (303) -- 504
Comprehensive
Loss for
the year -- -- -- -- -- -- 156 (118,501) (118,345)
Balance at
end of 2014
(audited) 94,800 116,395 71 11,834 (89,268) 75,467 527 (131,070) 78,756
======== ======== ======== ======== ============ ======== ============ ============ ==========
Share based
payment
charge -- -- -- 172 -- -- -- -- 172
Translation
difference -- -- -- -- -- -- (264) -- (264)
Comprehensive
Loss for
the year -- -- -- -- -- -- 24 (15,844) (15,820)
Balance at
30th June
2015
(unaudited) 94,800 116,395 71 12,006 (89,268) 75,467 287 (146,914) 62,844
======== ======== ======== ======== ============ ======== ============ ============ ==========
Trinity Exploration & Production Plc
Condensed Consolidated Statement of Cashflows for the period ended 30th
June 2015
(Expressed in United States Dollars)
Notes 6 months to 6 months Year ended
30th June to 30th June 31st December
2015 2014 2014
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Activities
Loss before taxation (12,998) (15,939) (128,788)
Adjustments for:
Translation difference (110) 133 (232)
Finance cost 2,639 1,687 3,985
Share options granted 172 251 163
Finance cost - decommissioning
provision 10 766 573 1,167
Finance income (1) (2) (33)
Depreciation, depletion and amortisation 5 2,897 8,706 16,335
Exploration cost write off 7 -- 17,463 14,929
Written off of 1(a) & 1(b) pre-acquisition
cost 4 6,055 -- --
Potential claim 4 -- -- 1,270
Loss on disposal of inventory 4 1,302 -- --
Loss on disposal of asset 4 108 -- --
Impairment on property, plant
and equipment 4 -- -- 96,242
Impairment of intangibles 4 -- -- 23,430
830 12,872 28,468
------------ -------------- ---------------
Changes In Working Capital
Inventory 5,238 (405) 121
Assets held for sale 12 104 -- --
Trade and other receivables (3,557) 7,074 14,792
Trade and other payables (3,695) (10,448) (27,742)
(1,080) 9,093 15,638
Taxation paid (53) (4,654) (3,837)
------------ -------------- ---------------
Net Cash (Outflow)/ Inflow From
Operating Activities (1,133) 4,439 11,801
------------ -------------- ---------------
Investing Activities
Purchase of exploration and evaluation
assets 7 (1,129) (8,478) (4,970)
Purchase of property, plant &
equipment 6 (87) (12,817) (11,941)
Net Cash (Outflow) From Investing
Activities (1,216) (21,295) (16,911)
------------ -------------- ---------------
Financing Activities
Finance income 1 2 33
Finance cost - borrowings (2,539) (1,687) (3,985)
Proceeds from borrowings 9 -- 5,000 25,000
Repayments of borrowings 9 (20,000) (2,010) (8,000)
------------ -------------- ---------------
Net Cash (Outflow)/Inflow From
Financing Activities (22,538) 1,305 13,048
------------ -------------- ---------------
(Decrease)/Increase in Cash and
Cash Equivalents (24,887) (15,551) 7,938
============ ============== ===============
Cash And Cash Equivalents
At beginning of period 33,084 25,145 25,145
Cash acquired in acquisition -- -- --
(Decrease)/Increase (24,887) (15,551) 7,939
------------ -------------- ---------------
At end of period 8,197 9,594 33,084
============ ============== ===============
Trinity Exploration & Production Plc
Notes to the Condensed Consolidated Financial Statements for the
period ended 30th June 2014
1 Background and Accounting Policies
Background
Trinity Exploration & Production Plc ("TEP Plc") is
incorporated and registered in England and trades on the
Alternative Investment Market ("AIM"), a market operated by London
Stock Exchange Plc. TEP Plc ("the Company") and its subsidiaries
(together "the Group") are involved in the exploration, development
and production of oil and gas reserves in Trinidad.
Basis of Preparation
These condensed interim financial statements for the six months
ended 30th June 2015 have been prepared in accordance with IAS 34,
'Interim financial reporting', as adopted by the European Union, on
a going concern basis. The condensed interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 31st December 2014, which have been prepared in
accordance with IFRSs as adopted by the European Union.
The results for the six months ended 30th June 2015 and 30th
June 2014 are unaudited and do not comprise statutory accounts
within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31st December 2014 were
approved by the board of directors and delivered to the Registrar
of Companies. The report of the auditors on those accounts was
unqualified, and contains an emphasis of matter paragraph.
Going Concern
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In making their going concern assessment, the Directors have
considered the Group's budget and cash flow forecasts. Discussion
with the Group's bankers is ongoing and, under the assumption that
the Group's remaining external debt is not recalled following
expiry of the current moratorium on 9th October 2015, the Group has
sufficient cash flow to continue operating for at least the next 12
months from the date of approval of these financial statements.
The Company is progressing the formal sales process along with
consideration of alternative funding options including the sale of
one or more existing assets, a farm-out or corporate transaction.
At the date of approving the condensed consolidated financial
statements, certain asset deals have been executed and a number of
conditional proposals and expressions of interest had been received
but not concluded.
For this reason, the Board of Directors continues to adopt the
going concern basis of preparing the financial statements. However,
the need for additional funding indicates the existence of a
material uncertainty which may cast significant doubt on the
Company and the Group's ability to continue as a going concern and,
therefore the Group and Company may be unable to fully realise
their assets and discharge their liabilities in the normal course
of business. The financial statements do not include the
adjustments that would be necessary if the Group and Company were
unable to continue as a going concern.
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year, as set out in the consolidated financial
statements for the year ended 31st December 2014, except for income
taxes in the interim periods which are accrued using the tax rate
that would be applicable to the expected total annual profit and
loss. The business is not affected by seasonality.
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year beginning on or after 1st
January 2015 that would be expected to have a material impact on
the group.
Estimates
The preparation of 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 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 31st December 2014.
Non-current assets (or disposal Groups) held for sale
Non-current assets (or disposal Groups) classified as held for
sale are measured at the lower of carrying amount and fair value
less costs to sell. Non-current assets and disposal Groups are
classified as held for sale if their carrying amount will be
recovered through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal Group) is available for
immediate sale in its present condition. Management must be
committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of
classification.
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 condensed 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 2014, which can be
found at www.trinityexploration.com. There have been no changes in
the risk management department or in any risk management policies
since the year end.
Liquidity risk
Compared to year end, there was no material change in the
contractual undiscounted cash out flows for financial liabilities,
except for the net decrease in borrowings of $20.0 million.
3 Operating segment information
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the steering committee that makes
strategic decisions. Management have considered the requirements of
IFRS 8, in regard to the determination of operating segments, and
concluded that the Group has only one significant operating segment
being the production, development and exploration and extraction of
hydrocarbons in Trinidad.
All revenue is generated from sales to one customer in Trinidad
& Tobago The Petroleum Company of Trinidad & Tobago
(PETROTRIN). All non-current assets of the Group are located in
Trinidad & Tobago.
4 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 Statement of Comprehensive Income.
An analysis of the amounts presented as exceptional items in these
financial statements are highlighted below.
30th June 30th June 31st December
2015 2014 2014
$'000 $'000 $'000
Impairment of property, plant & equipment -- -- (96,242)
Impairment of intangibles -- -- (23,484)
Potential claim -- -- (1,270)
Loss on winding up of subsidiaries (214) -- --
Loss on disposal of asset (108) -- --
Loss on disposal of casing (1,302) -- --
Fees relating to Formal Sale Process (610) -- --
Written off of 1(a) & 1(b) pre-acquisition (6,055) -- --
cost (note 15 (4))
Translation difference -- -- 57
(8,289) -- (120,939)
========== ========== ==============
5 Taxation
30th June 30th June 31st December
2015 2014 2014
$'000 $'000 $'000
Current tax
* Current period
Petroleum profits tax 38 3,196 1,075
Corporation tax 750 734 2,182
Supplemental petroleum tax 2,086 7,115 14,931
Deferred tax
* Current period
Movement in asset due to tax losses -- (15,665) 37,063
Movement in liability due to accelerated
tax depreciation -- 11,125 (33,214)
Unwinding of deferred tax on fair value
uplift (27) 517 (9,396)
Translation differences (1) (17) 16
Tax charge 2,846 7,005 12,657
========== ========== ==============
The Group has a deferred tax asset of $27.6 million on its
Statement of Financial Position which it expects to recover in more
than 12 months based on the expected taxable profits generated by
Group companies.
6 Property, Plant and Equipment
Land & Oil & Gas Plant &
Buildings Property Equipment Total
$'000 $'000 $'000 $'000
----------- ---------- ----------- ----------
Opening net book amount at 1st January
2015 2,334 78,347 4,974 85,655
Additions 3 55 29 87
Depreciation, depletion and amortisation
charge for period (73) (2,231) (593) (2,897)
Transferred to disposal group held
for sale (note 12) (430) (33,236) (457) (34,123)
Closing net book amount 30th June
2015 1,834 42,935 3,953 48,722
=========== ========== =========== ==========
Period ended 30th June 2015
Cost 2,333 178,400 6,779 187,512
Accumulated depreciation, depletion,
amortisation and impairment (499) (135,465) (2,826) (138,790)
----------- ---------- ----------- ----------
Closing net book amount 1,834 42,935 3,953 48,722
=========== ========== =========== ==========
Land & Oil & Gas Plant &
Buildings Property Equipment Total
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$'000 $'000 $'000 $'000
----------- ---------- ----------- ----------
Opening net book amount at 1st January
2014 2,558 168,901 6,133 177,592
Additions 7 12,776 30 12,813
Depreciation, depletion and amortisation
charge for period (68) (8,118) (520) (8,706)
Translation difference -- 4 -- 4
Closing net book amount 2,497 173,563 5,643 181,703
=========== ========== =========== ==========
Period ended 30th June 2014
Cost 3,215 268,327 12,142 283,684
Accumulated depreciation, depletion,
amortisation and impairment (718) (94,768) (6,499) (101,985)
Translation difference -- 4 -- 4
----------- ---------- ----------- ----------
Closing net book amount 2,497 173,563 5,643 181,703
=========== ========== =========== ==========
Land & Oil & Gas Plant &
Buildings Assets Equipment Total
$'000 $'000 $'000 $'000
----------- ---------- ----------- ----------
Year ended 31st December 2014
Opening net book amount at 1st
January 2014 2,558 168,901 6,133 177,592
Additions (106) 12,007 40 11,941
Impairment(1) -- (96,242) -- (96,242)
Transferred to available for sale -- (672) -- (672)
Adjustment to decommissioning estimate -- 8,156 -- 8,156
Depreciation, depletion and amortisation
charge for year (151) (14,914) (1,270) (16,335)
Translation difference 33 1,111 71 1,215
----------- ---------- ----------- ----------
Closing net book amount 31st December
2014 2,334 78,347 4,974 85,655
=========== ========== =========== ==========
At 31st December 2014
Cost 3,125 275,284 12,260 291,005
Accumulated depreciation, depletion,
amortisation and impairment (824) (198,048) (7,357) (206,565)
Translation difference 33 1,111 71 1,215
----------- ---------- ----------- ----------
Closing net book amount 2,334 79,347 4,974 85,655
=========== ========== =========== ==========
(1) No impairment loss was recognised in respect of period ended
30th June 2015, in 2014 several cash generating units ("CGU's")
were impaired, (2014: $96.2 million) as a result of a sharp fall in
oil prices combined with a downward revision in 2P reserve
estimates. The recoverable amount was determined by estimating its
fair value less costs to sell. In calculating this impairment,
management used a production profile based on proven and probable
reserves estimates and a range of assumptions, including third
party oil price assumptions and a discount rate assumption of
10%.
7 Intangible assets
Exploration and evaluation
assets
$'000
At 1st January 2015 25,676
Additions 1,129
At 30th June 2015 26,805
---------------------------
At 1st January 2014 59,002
Additions 8,478
Exploration cost write off (17,463)
Translation 7
---------------------------
At 30th June 2014 50,024
===========================
At 1st January 2014 59,002
Additions 4,969
Exploration cost write-off (14,929)
Impairment(1) (23,484)
Translation difference 118
---------------------------
At 31st December 2014 25,676
===========================
(1) An impairment loss of $23.5 million was recognised in 2014
following an impairment review on the carrying value of exploration
and evaluation assets which included:
EG-8: the EG-8 exploration well was drilled in 2012 on
north-east Galeota and suspended as an oil and gas discovery. A
technical study performed in 2014 indicated that the reserves
encountered were not commercial and cannot justify the cost of
developing either the gas or the oil resources encountered. This
led to the impairment of the costs $22.6 million to exceptional
items on the Statement of Comprehensive Income.
South Africa: costs of $0.9 million have been written off on the
basis that TEP Plc has no further exploration or evaluation
activities planned or budgeted for this licence and are in process
of relinquishing the licence for strategic reasons.
No further impairments was deemed necessary over the exploration
and evaluation assets of the Group.
8 Share capital
Number of Ordinary Share premium Total
shares shares $'000
$'000 $'000
As at 1st January 2015 94,799,986 94,800 116,395 211,195
As at 30th June 2015 94,799,986 94,800 116,395 211,195
=========== ========= ============== ========
9 Borrowings
30th June 30th June 31st December
2015 2014 2014
$'000 $'000 $'000
---------- ---------- --------------
Current 13,000 6,000 --
Non-Current -- 12,889 33,000
---------- ---------- --------------
13,000 18,889 33,000
========== ========== ==============
Movements in borrowings are analysed as follows:
$'000
6 months ended 30th June 2015
Opening amount as at 1st January 2015 33,000
Repayments of borrowings (20,000)
Closing amount as at 30th June 2015 13,000
------------
6 months ended 30th June 2014
Opening amount as at 1st January 2014 15,899
Proceeds from new borrowings 5,000
Repayments of borrowings (2,000)
Translation difference (10)
Closing amount as at 30th June 2014 18,889
------------
Year ended 31st December 2014
Opening amount as at 1st January 2014 15,899
Proceeds from new borrowings 25,000
Repayment of borrowings (8,000)
Translation difference 101
Closing balance at 31st December 2014 33,000
------------
Citibank (Trinidad & Tobago) Limited Loan 1
The key terms of the loan are as follows:
-- Principal amount $20.0 million
-- Interest rate is set at three month US LIBOR plus 600 basis points per annum
-- Debenture over the fixed and floating assets of Trinity
Exploration and Production (Trinidad and Tobago) Limited and its
subsidiaries.
-- Principal repayment in equal quarterly instalments commencing
on 20th March 2013 and ending on 20th December 2017
-- Interest payable monthly in arrears commencing on 20th March 2013
2015 Loan 1 Update
-- No principal payments were made between 1st January 2015 to
30th June, 2015 due to principal moratorium granted by Citibank
-- Quarterly interest payments remain in effect and were paid in March and June 2015
-- Outstanding balance of $12.0 million as at 30th June 2015
Citibank (Trinidad & Tobago) Limited Loan 2
The Group negotiated a floating rate medium term facility on
17th August, 2013 of $25.0 million with Citibank (Trinidad and
Tobago) Limited 'Citibank' which at 31st December, 2014 was fully
drawdown.
The key terms of the loan are as follows:
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-- Principal amount $25.0 million. Initial drawdown on 22nd
January 2014 of $5.0 million and a second drawdown of $20.0 million
on 4th August 2014
-- Interest rate is set at three month US LIBOR plus 575 basis points per annum.
-- The negotiated principal repayments in two initial quarterly
instalments of 16.0% following 6.5% to 7.0% quarterly instalments
commencing on 21st November 2014 and ending on 21st August 2017
2015 Loan 2 Update
-- A $20.0 million principal repayment in February 2015
-- No principal payments were made between 1st January 2015 to
30th June 2015 due to principal moratorium granted by Citibank
-- Quarterly interest payments remain in effect and were paid in February and May 2015
-- Outstanding balance of $1.0 million as at 30th June 2015
Debt Covenants
Financial covenants applicable to each of the above facilities
are:
-- Minimum debt service coverage 1.4:1
-- Maximum total debt to EBITDA-Operating taxes 2.75:1
-- Minimum EBITDA-Operating taxes to Interest Expense 1.5:1
The carrying value of borrowings is not materially different
from their fair value. At the end of the half year 2015, Trinity's
results was non-compliant with the debt service coverage ratio (the
minimum requirement being 1.4:1, however the actual ratio was c.
0.8:1). The entire borrowings have been classified as current due
to the breach of the debt service coverage ratio. Subsequently, a
moratorium on repayment of the remaining principal has been agreed
until 9th October 2015.
Analysis of net debt
At 1st At 30th
January 2015 Cashflow June 2015
$'000 $'000 $'000
-------------- --------- ------------
Cash and cash equivalents 33,084 (15,551) 8,197
Financial liabilities - borrowings -- (2,011) --
current
Financial liabilities - borrowings
non-current (33,000) (979) (13,000)
84 (18,541) (4,803)
-------------- --------- ------------
10 Provisions and Other Liabilities
Potential Decommissioning Total
Claim cost
$'000 $'000 $'000
6 months ended 30th June 2015
Opening amount as at 1st January
2015 1,270 38,505 39,775
Unwinding of discount -- 766 766
Transferred to disposal groups
held for sale
(note 12) -- (21,286) (21,286)
---------- ---------------- ---------
Closing balance as at 30th June
2015 1,270 17,985 19,255
========== ================ =========
6 months ended 30th June 2014
Opening amount as at 1st January
2014 -- 29,027 29,027
Unwinding of discount -- 572 572
---------- ---------------- ---------
Closing balance as at 30th June
2014 -- 29,599 29,599
========== ================ =========
Year ended 31st December 2014
Opening amount as at 1st January
2014 -- 29,027 29,027
Adjustment to estimates -- 8,156 8,156
Record potential claim 1,270 -- 1,270
Unwinding of discount -- 1,167 1,167
Translation differences -- 155 155
------ ------- -------
Closing balance at 31st December
2014 1,270 38,505 39,775
====== ======= =======
Potential claim
The amounts represent a provision for a potential claim against
a subsidiary of the Group by a supplier of services in the oil and
gas industry. In management's opinion these claims will not give
rise to any significant losses beyond the amounts provided at 31st
December, 2014. The potential claim is anticipated to be settled no
later than September 2016.
11 Inventory
30th June 31st December
2015 30th June 2014 2014
$'000 $'000 $'000
---------- --------------- --------------
Crude oil 314 444 346
Materials and supplies 6,357 11,990 11,563
---------- --------------- --------------
6,671 12,434 11,909
========== =============== ==============
12 Non-current assets held for sale
Certain assets and liabilities relating to Trinity's oil and gas
fields owned and operated by its indirect subsidiary Trinity
Exploration and Production (Trinidad and Tobago) Limited have been
presented as held for sale following approval of management and
Board of Directors by way of a Formal Sales Process ("FSP") on 8th
April 2015. On 1st February 2015 The WD-16 block was sold and the
carrying value of $0.1 million has been removed from the 30th June
2015 assets held-for-sale. On 1st September Trinity announced the
sale of the Guapo-1 block (see note 15 (3)). The completion date
for the transaction is expected within one year of the reporting
date.
(a) Assets of the disposal Group classified as held for sale
30th June 30th June 31st December
2015 2014 2014
Property, plant & equipment $'000 $'000 $'000
---------- ---------- --------------
Net Book Value at 1 Jan 672 -- --
Disposal of WD 16 (104) -- --
Transferred from property,
plant & equipment 34,123 -- 672
---------- ---------- --------------
Net Book Value 34,691 -- 672
========== ========== ==============
(b) Liabilities of the disposal group classified as held for
sale
30th June 30th June 31st December
2015 2014 2014
Other provisions $'000 $'000 $'000
---------- ---------- --------------
Decommissioning provision 21,286 -- --
========== ========== ==============
In accordance with IFRS 5, the assets and liabilities held for
sale criteria were met between the balance sheet date and the date
that the condensed financial statements were authorised.
13 Related party transactions
The following transactions were carried out with the Group's
related parties during the six months to 30th June 2015. These
transactions comprised sales and purchase of goods and services in
the ordinary course of business.
The receivables from related parties arise mainly from sale
transactions and are due one month after the date of sales. The
receivables are unsecured and bear no interest. No provisions are
held against receivables from related parties.
The payables to related parties arise mainly from purchase
transactions and are due one month after the date of purchase. The
payables bear no interest. A legal claim was made by the related
party Well Services Petroleum Company Limited against a subsidiary
of the Group to recover the balance owed of $2.5 million at the end
of 2014. Subsequent to this a payment has been made on 7th July
2015 with negotiations to settle the balance thereafter. There were
no other related party transactions in the period.
30th June 30th June 31st December
2015 2014 2014
$'000 $'000 $'000
-------------------------------------------- --------- --------- -------------
Sales of goods and services to related
parties 3,999 -- 142
Purchase of goods and services from related
parties 1,464 8,816 10,700
Receivables from related parties -- -- --
Payables to related parties 2,801 4,830 5,563
-------------------------------------------- --------- --------- -------------
14 Earnings per Share
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