TIDMTRIN
RNS Number : 1255T
Trinity Exploration & Production
16 July 2020
RNS ANNOUNCEMENT: The information communicated in this
announcement contains inside information for the purposes of
Article 7 of Regulation 596/2014.
Trinity Exploration & Production plc
("Trinity" or "the Group" or "the Company")
Q2 2020 Operational Update
Strong production, financial resilience and cash to deploy
enables focus on scaling the business
Trinity Exploration & Production plc (AIM: TRIN), the
independent E&P company focused on Trinidad and Tobago, today
provides an update on its operations for the three-month period
ended 30 June 2020 ("Q2 2020" or "the period").
Trinity has continued to combine growing production levels, a
low operating break-even and a technically advanced operating
capability with a robust financial position, putting the Company in
an exceptional position to contemplate new investment
opportunities.
Significantly, production levels were maintained during Q2 2020
with production volumes averaging 3,272 bopd, yielding a H1 2020
average of 3,282 bopd. The Group's unaudited cash balances
increased to US$19.7 million as at 30 June 2020 (US$13.8 million
(audited) as at 31 December 2019).
The Company reduced its pre-hedge income operating break-even
(revenues less royalties, opex and G&A) by over 15%
quarter-on-quarter to US$22.6/bbl (unaudited) (Q1 2020: US$26.7/bbl
(unaudited)). After hedging income, this translates into an
effective operating break-even of $21.6/bbl indicating that the
Company is well on track to meet its target operating break-even
(inclusive of hedging income) of US$20.5/bbl for FY 2020.
Q2 2020 Operational Highlights
-- 8.5 % year-on-year increase in Group average production
volumes to 3,272 bopd for the second quarter (Q2 2019: 2,996 bopd)
without any new wells being drilled, representing broadly flat
quarter-on-quarter production (Q1 2020: 3,291 bopd).
-- H1 2020 average production volumes of 3,282 bopd represent a
year-on-year increase of 9.1% (H1 2019 3,008 bopd).
-- 3 recompletions ("RCPs") (Q1 2020: 3) and 17 workovers (Q1
2020: 39) were completed during the period, with swabbing
continuing across all onshore assets.
-- Successful application of Weatherford's Supervisory, Control
and Data Acquisition ("SCADA") with improved quantitative and
qualitative performance from the wells
o Improved problem diagnosis
o More accurate operational responses to issues
o Better understanding of system performance as related to
technical design
o Extending run-life
o Greater optimisation of wells.
-- Production volumes for the remainder of 2020 will depend on
oil price and general market conditions supporting the economic
case for the resumption of drilling activity.
-- Even if the prevailing oil price environment does not support
the case for a resumption of drilling in the near term, net average
production for 2020 is still expected to be in the range of 3,100 -
3,300 bopd (2019: 3,007 bopd).
Q2 2020 Financial Highlights
-- Average realisation of US$26.4/bbl for Q2 (Q1 2020:
US$46.3/bbl) yielding a H1 2020 average of US$36.3/bbl (H1 2019:
US$59.1/bbl). As a result, no Supplemental Petroleum Taxes (" SPT
") will be payable with respect to H1 2020 production.
-- Cash balance of US$ 19.7 million (unaudited) as at 30 June
2020 (31 December 2019: US$13.8 million, audited). The H1 2020 cash
balance reflects:
o Cash outflows for Q4 2019 taxes (including SPT) of c.US$2.2
million, as well as annual payments (such as insurance and licence
obligations) of US$0.7 million and capex of c. US$2.5m during H1
2020.
o Cash inflows of US$2.7 million (from the drawdown of the CIBC
First Caribbean working capital facility), US$2.8 million (from the
sale of the recently received VAT Bonds) and net hedge income of
US$0.8 million received during H1 2020.
-- Robust production levels combined with strict cost controls
resulted in an average operating break-even of US$ 22.6/bbl
(unaudited) for Q2 2020 versus Q1 2020 at US$26.7/bbl (unaudited)
and compared to US$26.0/bbl for Q2 2019.
-- The downward trends in operating break-even continues, with
the June 2020 level of US$21.6/bbl (post hedging income:
US$19.8/bbl).
-- The Company is on track to meet its target for average
operating break-even (inclusive of hedging income) of US$ 20.5/bbl
for FY 2020.
Operations Update
The Company's field operations have not, to date, been
negatively impacted by COVID-19, but we continue to monitor the
situation and have put further appropriate measures in place
(including temperature checks) and will continue to adapt as and
when required.
The Company's continued focus on managing production decline has
resulted in production levels being maintained at close to recent
highs even in the absence of new wells being drilled and a reduced
number of RCPs being undertaken. Protecting past investment is a
key priority and ensures that rates of return are maintained
despite the dramatic reduction in the oil price.
The extent and timing of the resumption of the onshore drilling
programme will be dependent on the prevailing economic environment
during the remainder of this year. In the meantime, the sub-surface
team has been tasked with prioritising the identification of high
angle well ("HAW") drilling locations and the Company will continue
to roll out further SCADA platforms on selected existing wells.
On the Company's east coast Galeota licence, dialogue continues
with both Heritage Petroleum Company Limited (Trinity's partner)
and The Ministry of Energy and Energy Industries (Trinity's
regulator) in moving both the Trintes Field area and the TGAL field
development forward. The Environmental Impact Assessment ("EIA")
study commenced in February with all dry season data collection
having subsequently been completed and wet season data collection
is due to commence shortly. Work on building the dynamic reservoir
model continues on the TGAL development. This important work
assists in optimal platform and well placement and in better
understanding the best strategy to drain the maximum amount of
reserves with the minimum number of wells.
New Business: Pursuing Scale
Trinity's production model delivers free cash generation across
a broad range of oil prices. This is underpinned by the Company's
drive to reduce costs and maintain industry leading operating
break-even levels. Furthermore, the Company's financial strength
compared to many of its peers, where break-evens are higher and
finances are potentially more constrained, means that it is well
placed to take advantage of commercial opportunities as and when
they arise.
Outlook
The focus remains on tight cost controls and maintaining
profitable production in the current low oil price environment
thereby preserving balance sheet strength. Progress towards the low
target break-even highlights the strength of the Company's
operating model. The Company's strong production base combined with
its ever increasing use of analytics provides a solid base for
continued organic growth. In addition, asset acquisitions and
partnerships are another possible source of growth, offering the
potential to increase scale, drive economies and thereby improve
operating break-evens and cash generation to further enhance
shareholder value.
Upcoming Results
The Company will announce its interim results for the six-month
period ended 30 June 2020 in early September. This announcement
will provide further detail on production, margins, operating
break-even, costs and profitability - highlighting the growing
value of the Company's assets and continued strong financial
performance.
Bruce Dingwall CBE, Executive Chairman of Trinity,
commented:
"Sustaining production levels under the current exceptional
circumstances is an incredible achievement and ought not to be
underestimated. To maintain higher production levels with very
limited financial investment and the added restrictions of
COVID-19-secure practices is a testament to the strength of the
business and ultimately the intense efforts of the team.
"It is this extreme, and unexpected, stress testing event that
has given the Company the increased confidence and ability to focus
on scaling the business. When one considers our financial
discipline, balance sheet strength and credibility, as well as our
differentiated operating model and corporate ambition, we are very
well placed to grow our business both organically and via external
opportunities.
"I must again thank all off our staff for their unstinting
dedication to their jobs and responsibilities and to the supply
chain and their employees for supporting our operations through
this extraordinary period of both a challenge and now an
opportunity."
Enquiries
For further information please visit www.trinityexploration.com
or contact:
Trinity Exploration & Production plc +44 (0)131 240 3860
Bruce Dingwall CBE, Executive Chairman
Jeremy Bridglalsingh, Managing Director
& Chief Financial Officer
Tracy Mackenzie, Corporate Development
Manager
SPARK Advisory Partners Limited (Nominated
Adviser and Financial Adviser) +44 (0)20 3368 3550
Mark Brady
Cenkos Securities PLC (Broker)
Joe Nally (Corporate Broking) +44 (0)20 7397 8900
Neil McDonald +44 (0)131 220 6939
Walbrook PR Limited +44 (0)20 7933 8780
Nick Rome trinityexploration@walbrookpr.com
About Trinity ( www.trinityexploration.com )
Trinity is an independent oil and gas exploration and 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 nine
licences and, across all of the Group's assets, management's
estimate of 2P reserves as at the end of 2018 was 24.5 mmbbls.
Group 2C contingent resources are estimated to be 18.8 mmbbls. The
Group's overall 2P plus 2C volumes are therefore 43.3 mmbbls.
Trinity is quoted on the AIM market of the London Stock Exchange
under the ticker TRIN.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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