TIDMTRIN
RNS Number : 1326C
Trinity Exploration & Production
15 October 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")
Q3 2020 Operational Update
Strong production & cash generation and focus on creating a
differentiated company of scale
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 September 2020 ("Q3 2020" or "the period").
Production levels remained robust during Q3 2020 with volumes
averaging 3,135 bopd, yielding a year to date ("YTD") 2020 average
of 3,232 bopd. This represents a 9.8% increase over the
corresponding period last year. The October month to date average
is 3,225 bopd.
Cash generation also remained strong during the period, with the
Group's unaudited cash balances increasing to US$22.2 million as at
30 September 2020 (US$19.7 million (unaudited) as at 30 June
2020).
Trinity's robust operating model and financial resilience are
affording the Company the flexibility to examine a range of
strategic growth options to increase the scale of the business,
both from within the current portfolio and from new opportunities.
The recent submission of Expressions of Interest ("EOI's") on two
new opportunities, in partnership with a large international
operator, are examples of such opportunities. As a short-listed
party, the next step for the first opportunity, the Jubilee Field,
is expected to be access to the data room as part of the next stage
bid process.
The Board believes that the Group's robust business model,
financial resilience, expanding opportunity set and focus on
automation and transition technologies, will enable the Company to
develop into a differentiated company of scale.
Strategic Highlights: Pursuing Scale & Automation
-- A solid reserves base and production profile are matched by an extensive development pipeline
-- Continued development of new sub-surface ideas and potential geological plays
-- The increasing use of analytics, transition technologies and
automation provide a differentiated and scalable foundation for
continued growth
-- Financial strength means that Trinity is well placed to take
advantage of commercial opportunities as and when they arise
-- Asset acquisitions and partnerships offer the potential to
increase scale, share risk and drive economies
-- Memoranda of Understanding have been signed with both a large
international operator and two large international contractors on
new business initiatives
-- EOI's submitted, in conjunction with these consortium
partners, on two E&P opportunities of scale
Q3 2020 Operational Highlights
-- Robust COVID-19 measures continue with no significant impact to operations and production
-- 11.3% year-on-year increase in Group average production
volumes to 3,135 bopd for the third quarter (Q3 2019: 2,816
bopd)
-- YTD 2020 (Q1-Q3) average production volumes of 3,232 bopd
represent a year-on-year increase of 9.8% (YTD 2019 2,943 bopd)
-- 8 recompletions ("RCPs") (Q2 2020: 3) and 27 workovers (Q2
2020: 17) were completed during the period, with swabbing
continuing across all onshore assets and extended to the west coast
assets
-- The application of SCADA technology and wider scale
automation continues at pace with the increasing use of automation
hardware and analytical applications into well operation
processes
-- Production guidance remains unchanged, with average net
production for 2020 still expected to be in the range of 3,100 -
3,300 bopd (2019: 3,007 bopd)
Q3 2020 Financial Highlights
-- Average realisation of US$39.3/bbl for Q3 (Q2 2020:
US$26.4/bbl) yielding a YTD 2020 average of US$37.3/bbl (YTD Q3
2019: US$58.3/bbl). As a result, no Supplemental Petroleum Taxes ("
SPT ") will be payable with respect to the first three quarters of
2020
-- Cash balance of US$22.2million (unaudited) as at 30 September
2020 (31 December 2019: US$13.8 million, audited). Net cash (cash
minus debt) balance of US$19.5 million (unaudited), excluding
US$2.7 million drawn working capital facility, versus US$13.8
million (audited) as at 31 December 2019
-- The 40% increase in net cash balances since the year end has
been driven by strong operating cash flow generation (despite the
36% reduction in the oil price versus the equivalent period in
2019)
-- Forecast free cash flow positive for FY 2020 at current forward curve
-- Cash balances at year end expected to be closer to 30 June
2020 level with investment in growth projects during Q4
Post Period-End Highlights
-- Trinidad and Tobago's Budget Statement on 5 October 2020
confirmed the proposed reforms of SPT, particularly for small
producers and mature fields, with a view to encouraging investment
and job creation, effective from 1 January 2021. Specifically:
o The threshold for the imposition of SPT will be lifted from
$50/bbl to $75/bbl for fiscal years 2021 and 2022;
o This increased threshold will apply to small onshore producers
(understood to be where the asset/licence produces less than 2,000
bopd) and is also expected to apply to small mature offshore
fields;
o The new SPT regime will be reviewed, for potential
continuation at this threshold level, at the end of the two year
period.
Operations Update
The Company's field operations have not, to date, been
negatively impacted by COVID-19, but the management team continues
to monitor the situation and has put further appropriate measures
in place which will continue to be adapted as and when
required.
Production levels have remained robust, with current production
in excess of 3,200 bopd, even in the absence of new wells being
drilled. Protecting past investment is a key priority and ensures
that rates of return are maintained despite the dramatic reduction
in the oil price.
Onshore
The potential to increase production from existing wells is a
key driver behind the Group's automation focus with WD 5/6 being
the first onshore licence to have a wide-scale rollout (taking the
total to 31 automated wells from 8 currently). WD 5/6 is Trinity's
second largest production unit after Trintes. At Trintes, where the
key wells have now been automated for several years, production has
increased by over 20% and production volatility has been reduced
dramatically. The increasing rollout of SCADA units and wider scale
automation on the higher margin onshore wells is expected to
deliver a meaningful uplift to the top and bottom-line performance
of the asset. Trinity has a dedicated internal team driving
automation and data science forward and a new workshop will be set
up shortly to facilitate the assembly and servicing of our
automation units.
Offshore
On the Company's east coast Galeota block detailed technical and
commercial engagement continues with a leading international
contractor for the offshore facilities design. Discussions are also
progressing with both Heritage Petroleum Company Limited and The
Ministry of Energy and Energy Industries (Trinity's regulator) to
move the Galeota block licence renewal forward.
The Environmental Impact Assessment ("EIA") study commenced in
February 2020 with all dry season data collection having been
completed and wet season data collection having commenced in
September. The EIA study and data is due to be submitted in H1
2021.
The offshore geophysical survey scope was completed on 8 October
2020 and the nearshore survey is expected to commence on 15 October
2020. The data collected from this survey will be used for both the
EIA models and pipeline engineering.
The dynamic reservoir model on the development continues with
Axis Well Technologies in Aberdeen. This important work will assist
in optimal platform and well placement and enable the Company to
develop the best reservoir strategy to drain the maximum amount of
reserves with the minimum number of wells.
Outlook
The Company's robust production base combined with its
increasing use of data science and automation provides not only a
solid base for continued organic growth, but a new differentiated
way in managing the business. In addition, asset acquisitions and
partnerships are another focus of growth, offering the potential to
increase scale, drive economies and, when automation and data
analytics are layered on, to further improve financial returns and
enhance shareholder value.
Bruce Dingwall CBE, Executive Chairman of Trinity,
commented:
"Continuing to sustain production levels and further strengthen
our balance sheet through strong cash generation under the current
exceptional circumstances, and in the absence of new drilling
activity, is a commendable achievement. 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."
"The announcement in the 2020 budget on 5 October 2020 of
reforms to the Petroleum Act and, in particular, the proposed
re-setting of SPT to commence at US$75/bbl rather than US$50/bbl,
for an initial two year period from 1 January 2021, is an extremely
positive development for the Company. When enacted, this will
substantially strengthen the investment case, to the benefit of all
stakeholders in the business."
"I must again thank all our staff for their unstinting
dedication and the supply chain and their employees for supporting
our operations through this challenging period. We are well
positioned and can clearly see the exciting opportunities in front
of us."
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
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.
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