Trinity Exploration & Production plc (AIM: TRIN), the independent E&P company focused on Trinidad and Tobago ("T&T"), announces its unaudited interim results for the six-month period ended 30 June 2024 ("H1 2024" or "the Period").
Update on takeover offers
On 1 May 2024, Trinity and Touchstone Exploration Inc (TSX, LSE: TXP) ("Touchstone") announced that they had reached agreement on the terms of a recommended all share offer, pursuant to which Touchstone would acquire each Trinity share for 1.5 new Touchstone Shares, to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 ("scheme of arrangement") (the "Touchstone Offer").
On 2 August 2024, Trinity and Lease Operators Limited ("Lease Operators") announced that they had reached agreement on the terms of a recommended all cash acquisition, pursuant to which Lease Operators would acquire each Trinity share for 68.05 pence in cash (the "Acquisition"), also to be effected by means of a scheme of arrangement. At the same time, the Trinity board of directors withdrew its recommendation of the Touchstone Offer as it considered the Acquisition to be superior and in the best interests of Trinity Shareholders.
On 25 September 2024, the Court granted Trinity permission to formally withdraw the scheme of arrangement relating to the Touchstone Offer and, as a result, the Touchstone Offer lapsed with immediate effect.
The Acquisition remains subject to certain other conditions, including the approval of Trinity Shareholders at a Court Meeting and a General Meeting and the Court's sanction of the Scheme at a Court Hearing.
A further update, including the timetable for the Acquisition will be made in due course.
H1 2024 Operational Highlights
H1 2024 saw a production decline of nine percent (9%) against H1 2023 which is within the expected natural decline range for mature fields in the absence of development drilling activities. Production was supported with a programme of recompletions and workovers.
- H1 2024 average net sales volume was 2,595 bopd (H1 2023: 2,861 bopd).
Sales volumes were supported by five recompletions (H1 2023: three) and 51 workovers and reactivations (H1 2023: 62) undertaken during the Period. Swabbing production continued across the Onshore and West Coast assets and contributed approximately ten percent (10%) of Trinity's production. A program of six heavy workovers is scheduled for the second half of 2024.
- The decrease in production between H1 2024 vs H1 2023 was largely a result of the failure to return a large producing Trintes well to potential production in July 2023 due to operational issues. A workover was conducted on this well in February 2024 to investigate and optimise production, but ultimately the workover was unsuccessful. A further workover of this well is being planned for H2 2024.
- The production decline from Onshore Assets was attributed to three major wells being shut-in during H1 2024 due to mechanical/wellbore problems. Workovers were carried out during the period to restore production, but they have proved unsuccessful to date. Further workovers are planned for H2 2024.
- The Jacobin exploration well drilled in 2023 was recompleted in the Lower Forest horizon in May 2024 following disappointing production results in the deeper Cruse horizons. The well was placed on pump and is currently producing around 11 bopd.
- The ABM-151 well in the Brighton Marine block, offshore the West Coast of Trinidad, which was returned to production on 21 March 2023 following an extensive refurbishment of surface facilities and the installation of remote surveillance technology, has maintained production with no significant decline between H2 2023 (106 bopd) and H1 2024 (109 bopd). Trinity continues to monitor this well closely as this well has a high risk of sand production.
H1 2024 Financial Highlights
- Average oil price realisation of USD 71.5/bbl for H1 2024 (H1 2023: USD 65.2/bbl). During the Period, the realised price that the Company received for Onshore and West Coast oil sales was at an average discount of 13.9% to Brent; less than the long-term average discount of approximately 15%. East Coast oil sales are made under a fixed arrangement that is a 15% discount to Brent.
- The Company remains unhedged.
- Cash balance of USD 8.0 million as at 30 June 2024 (YE 2023: USD 9.8 million) reflecting a combination of stable operating cash generation net of finalisation of 2023 undisputed Jacobin costs paid in 2024, limited investment in capex, and cash outflows of USD 1.7m to support the ongoing acquisition.
- Stable net cashflows generated from operating activities as at H1 2024 USD 4.8 million (H1 2023: USD 6.3 million).
- Revenues of USD 33.8 million were generated in the Period (H1 2023: USD 33.8 million) driven by lower sales production offset by higher oil prices.
- Cash operating costs of USD 23.2/bbl (H1 2023: USD 20.1/bbl) mainly driven by the overall impact of lower sales production (2,595 in H1 2024 vs 2,861 in H1 2023).
- General and administrative costs of USD 6.8/bbl (H1 2023: USD 6.3/bbl) mainly due to the impact of lower sales production.
- Average operating break-even for H1 2024 was increased at USD 42.6/bbl (unaudited) (H1 2023: USD 34.5/bbl) resulting from a slightly higher operating cost and lower sales volume.
- The Group had drawn borrowings (overdraft) of USD 3.0 million at 30 June 2024 (YE 2023: USD 4.0 million).
2024 Guidance
The sales guidance range for 2024 has been reduced to 2,450-2,550 bopd.