Trinity Exploration & Production plc, 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 2023 ("H1 2023" or "the Period").
Strategic Highlights
· Jacobin-1 was confirmed as an oil discovery on 7 August 2023. Subsequently, the Well Services Limited Rig 60 drilling rig rigged down and a heavy-duty workover rig, Rigtech Rig #9, mobilised to the wellsite to run the completion, perforate and tie the well into production facilities. Final testing of equipment is currently in progress and initial production is anticipated within days. Oil produced will immediately be sold to the state oil company, Heritage.
· Trinity was successful in its bid for the onshore Buenos Ayres block, further leveraging our competitive advantage in the Palo Seco area, onshore Trinidad subject to receiving the licence from the Ministry of Energy.
· The Company is progressing, with Petrofac, a Concept Screening study for the development of further reserves and resources in its Galeota Block. Initial findings from Petrofac's study are encouraging. These concepts are now being economically assessed and ranked and, together with development studies on the existing Trintes field, will form part of an integrated approach to unlock further value from Trinity's East Coast Asset.
· Gas sampling and analyses that will underpin the Company's evaluation of its Scope 1 emissions was completed during the period. In H2 2023 analysis of gas rate quantification will be undertaken to enable the Company to quantify its Scope 1 emissions by the end of the year.
H1 2023 Operational Highlights
H1 2023 saw production levels broadly maintained against H1 2022 with a programme of recompletions and workovers.
· H1 2023 average net sales volume was 2,861 bopd (H1 2022: 2,974 bopd).
Sales volumes were supported by three recompletions ("RCPs") (H1 2022: 11) and 62 workovers and reactivations ("WOs") (H1 2022: 61) undertaken during the Period including 7 workovers started at the end of 2022 completed in 2023, with swabbing continuing across the onshore and West Coast assets. Four additional RCPs are being worked up for execution in H2 2023.
· The ABM-151 well in the Brighton Marine block, offshore the West Coast of Trinidad, was returned to production on 21 March 2023 following an extensive refurbishment of surface facilities and the installation of remote surveillance technology. Between restart and the end of the period the well flowed at an average rate of 175 bopd. The well produced on average 130 bopd during H1 2023 and Trinity continues to monitor the well closely.
H1 2023 Financial Highlights
· Average oil price realisation of USD 65.2/bbl for H1 2023 (H1 2022: USD 90.1/bbl). During the Period, the realised price that the Company received for Onshore and West Coast oil sales was an average discount of 20.6% to Brent; wider than the standard 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 11.3 million as at 30 June 2023 (YE 2022: USD 12.1 million) reflecting a combination of strong operating cash generation, no hedging or hedging losses incurred and limited investment in capex, including only the initial cost to support the drilling of Jacobin-1. The Jacobin-1 drilling and completion costs are anticipated to exceed initial estimates due to additional drilling days as a result of drilling challenges encountered and additional testing and data acquisition scope than originally considered. While the impact of the increased well costs will result in lower than anticipated cash balances, we remain on track to continue to invest in our growth options and commence our maiden interim dividend.
· Strong net cashflows generated from operating activities as at H1 2023 USD 6.3 million (H1 2022: USD 2.9 million).
· Revenues were reduced 30% to USD 33.8 million (H1 2022: USD 48.5 million) driven by lower oil prices and, to a lesser extent, lower volumes.
· Cash operating costs of USD 20.1/bbl (H1 2022: USD 17.6/bbl) driven by supply chain increases, increased maintenance activities across the assets, including supporting labour to complete these activities, and the overall impact of lower sales production (2,861 in H1 2023 vs 2,974 in H1 2022) contributed to the higher cash operating costs (per bbl) in H1 2023 vs H1 2022. This excludes the initial cost incurred on the Trintes Bravo fire incident in H1 2023 of USD 0.1 million. Remediation work is expected to continue into H2 2023.
· General and administrative costs of USD 6.3/bbl (H1 2022: USD 6.6/bbl) mainly due to lower consultancy fees incurred and levies driven by lower oil prices.
· Average operating break-even for H1 2023 was moderately increased at USD 34.5/bbl (unaudited) (H1 2022: USD 32.4/bbl) resulting from a higher operating cost and slightly lower sales volume.
· The Group had drawn borrowings (overdraft) of USD 2.0 million at 30 June 2023 (YE 2022: USD 2.7 million).
Corporate Highlights
Inaugural Dividend
As announced in the Company's 2022 Full Year Results on 1 June 2023, the Group will pay its first interim dividend of 0.5 pence per ordinary share to be paid on 26 October 2023 to all shareholders on the register on 6 October 2023 (the "Record Date").
The Dividend will be paid by electronic transfer. The Company's Registrar will provide an option for non-UK shareholders to receive payments in another currency.
Increased Overdraft Facility from USD 5.0 million to USD 8.0 million
Trinity agreed to an upsized credit facility with FirstCaribbean International Bank (Trinidad & Tobago) Limited ("CIBC FirstCaribbean") on 25 August 2023, providing for an increase of the facility from USD 5 million to USD 8 million.
The increased facility will provide Trinity with the flexibility to follow-up on the play-opening Jacobin-1 well, targeting further onshore activity and to progress development planning for the Company's material Galeota East Coast offshore asset.
Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:
"The first six months of 2023 saw Trinity progressing important catalysts within our refreshed strategy.
First, our Jacobin-1 well successfully intersected multiple oil-bearing sands. Success with Jacobin increases our confidence in the portfolio of Hummingbird prospects that forms a cornerstone of our revitalised onshore strategy.
Second, in June we were successful in our bid for the Buenos Ayres block which lies immediately to the west of our existing Palo Seco licences. We have started the acquisition of the Buenos Ayres EIA ahead of the formal award of the licence to progress this strategic option with pace.
Third, we appointed Petrofac to undertake a Concept Screening study for the development of further reserves and resources on our Galeota East Coast asset, using a low cost, more flexible approach than originally envisaged.
Lastly, our maiden interim dividend will be paid in October, representing an important aspect of our capital allocation policy that was designed to provide our shareholders with a cash return, in addition to the growth options currently being pursued.
I look forward to continuing to update shareholders on our further progress at a very busy and exciting time for Trinity".
