Half-year Report

RNS Number : 6332R
Trinity Exploration & Production
25 September 2017
 

 

 

Dissemination of a Regulatory Announcement that contains inside information according to

REGULATION (EU) No 596/2014 (MAR).

 

Trinity Exploration & Production plc

 ("Trinity")

 

Interim Results

 

Balance sheet cleansed, increased profitability and production set to grow

 

Trinity, the independent E&P Company focused on Trinidad & Tobago, today announces its unaudited interim results for the six months ended 30th June 2017 ("the period"). H1 2017 was a pivotal period for Trinity with the completion of a refinancing and restructuring in January 2017 and a ramp up in operating activity. The Company's focus is now centred on safely increasing production, and this, along with its strong cash flows, low net debt and continued financial discipline provides a platform to grow profitable production from its significant reserve base.

 

H1 2017 Highlights

 

 

H1 2017

H1 2016

% Change

 

 

 

 

Average realised oil price (USD/ bbl)

           46.3

           32.8

41

Average net production (bopd)1

     2,397

         2,612

(8)

EBITDA (USD MM)2

           5.5

           1.5

267

 

 

 

 

Consolidated EBITDA (USD/bbl)3

           12.6

             3.8

232

Consolidated Break-even (USD/bbl) 4

28.2

           29.9

(6)

 

 

 

 

Cash Balance (USD MM)

           11.5

             5.1

125

Net Debt (USD MM)5

           (1.2)

         (34.3)

(97)

 

 

Notes:

1.     Average net production for H1 2016 is exclusive of the Guapo block which illustrates a like-for-like comparative. The year-on-year comparative inclusive of the Guapo block was 2,659 bopd which equated to an overall 10% decline

2.     EBITDA: Operating profit before Depreciation, Depletion and Amortisation

3.     Consolidated EBITDA/bbl: EBITDA / Net production

4.     Consolidated operating break-even/bbl: See Appendix 1-Trading Summary Table

5.     Net debt position is detailed in Appendix 2, unaudited Management view

 

 H1 2017 Highlights

 

Financial Highlights

Growing margins and increasing profitability within the current oil price environment

·     Increased consolidated operating netback by 232% to USD 12.6/bbl (H1 2016: USD 3.8/bbl); and

·     Reduced consolidated operating breakeven price by 6% to USD 28.2/bbl (H1 2016: USD 29.9/bbl).

Strengthened balance sheet

·     Reduction in net debt by 97% to USD (1.2) million (H1 2016: USD (34.3) million); and

·     Increase in cash balance by 125% at period end of USD 11.5 million (H1 2016: USD 5.1 million).

 

Operating Highlights

Safely growing production profitably

            ·     8% year-on-year, like for like production decline to 2,397 bopd (H1 2016: 2,612 bopd) was mainly due to natural decline and a lack of production investment in 2016;

            ·     H1 activity set included:

5 Onshore Recompletions ("RCPs") (H1 2016: nil)

4 Onshore Reactivations (H1 2016: nil) 

40 Workovers ("WOs") completed: 34 Onshore, 5 East Coast and 1 West Coast (H1 2016: 33);

Resumption of Swabbing across 5 Onshore fields. (Swabbing is a process to mechanically remove liquids from the production zone of a gas or oil well)

            ·     H1 production performance:

During Q1 there was a proportionate return to production investment while ensuring that financial discipline was maintained;

An upward production trajectory in Q2 was stymied by Tropical Storm Bret in June, with a quick recovery in July, and continued into August;

            ·     Pioneered new technology on East Coast in June with the installation of an alternative low cost artificial lift;                  Mechanically Pumping Hydraulic Unit ("MPHU") on a slanted wellhead;

·     Increased activity was commensurately matched with increased HSE focus through training and audits;

·     Trinity received an HSE award for Safety Leadership Engagement from the national oil company; Petroleum Company of Trinidad and Tobago ("Petrotrin").

 

Corporate Highlights

·     Reduced downside exposure to commodity risk/low oil prices by hedging over 35% of production should the WTI oil price fall below USD 40.0/bbl in the period from 1st April 2017 to 31st March 2018, through the purchase of put options;

·     Board changes, with Jeremy Bridglalsingh, David Segel and Angus Winther joining the board on the completion of the refinancing and restructuring in January 2017 and Jonathan Murphy stepping down and James Menzies joining the Board after the AGM in June 2017; and

·     Retained the services of Walbrook PR Limited as financial PR advisor and Whitman Howard Limited as equity advisor.

 

Post Period End Highlights

Continued upward trajectory in production

·     A further increase in operating activities across core assets during July-August 2017 restored production with average production of 2,609 bopd in August 2017; and

·     H2 2017 planned work programme consists of; at least 30 RCPs, 30 reactivations, 30 routine WOs and increased swabbing, which should enable the lower end of the initial production guidance (2,600-2,800 average bopd for 2017) to be achieved, and at a lower cost, and better economics, than originally planned.

Sale of West Coast assets

             ·     On 11th August 2017 Trinity announced that it entered into a binding sale and purchase agreement ("SPA")                    to sell its interests in the West Coast licences and related fixed assets to Range Resources Trinidad Limited                   ("Range") for a cash consideration of USD 4.55 million. The transaction is expected to complete in Q4 2017.

                  Bruce A. I. Dingwall CBE, Executive Chairman of Trinity, commented:

 

"Having secured Trinity's future in January, H1 2017 saw a directional change in the organisation's activities with the focus on preparing the Company for growing production safely while maintaining financial discipline in order to maximise the returns from our high-quality asset base. I am proud of the effort the team has given to date and grateful for the support the Company has received from our key suppliers and stakeholders. Our progress thus far is testament to that combined effort.

 

With the challenges of the last two years behind us our attention is now on safely increasing levels of profitable production from our core Onshore and East Coast assets and on obtaining the regulatory approvals that will allow the West Coast sale to reach financial close thereby further strengthening our balance sheet. H2 2017 has already seen operational activity ramping up with RCPs and WOs headlining the programme. Work on new infill targets is progressing well and the results may support an expansion of drilling options going forward.

 

Asset integrity is a fundamental part of our business cycle. We are undertaking several key infrastructure projects during H2 2017 to underpin further growth. Combined, these activities provide scope to grow production from current levels to an initial target run-rate of 3,000 bopd in the near future.

 

On behalf of the Board I must thank all our staff and stakeholders for their hard work and support which has allowed Trinity to focus on profitable growth. H1 2017 has been transformational and we are intent on building our business based on a sure footing in this new oil price environment. 

We look forward with confidence and in providing a further quarterly update in November."

 

Enquiries

 

Trinity Exploration & Production

Bruce Dingwall, Executive Chairman

Jeremy Bridglalsingh, Chief Financial Officer

 

 

Tel: +44 (0) 131 240 3860

 

 

SPARK Advisory Partners Limited (NOMAD & Financial Adviser)

Mark Brady

Miriam Greenwood

James Keeshan

 

Tel: +44 (0) 203 368 3550

Cantor Fitzgerald Europe (Broker)

David Porter

Sebastien Maurin

Tel: +44 (0) 207 894 7000

 

 

Whitman Howard Limited (Equity Advisor)

Nick Lovering

 

Tel: +44 (0) 207 659 1234

Walbrook PR Limited

Nick Rome

trinityexploration@walbrookpr.com or Tel: +44 (0) 207 933 8780

 

Competent Person's Statement

 

All reserves and resources related information contained in this announcement has been reviewed and approved by Graham Stuart, Trinity's Technical Adviser, who has 35 years of relevant global experience in the oil industry.  Mr. Stuart holds a BSC (Hons) in Geology.

 

About Trinity (www.trinityexploration.com)

 

 

 

Trinity is an independent oil and gas exploration and production Company focused solely on Trinidad & Tobago.  Trinity operates producing and development assets both onshore and offshore, in the shallow waters off the 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.  Trinity 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 2016 was 21.3 mmbbls. Group 2C contingent resources are estimated to be 21.1 mmbbls. The Group's overall 2P plus 2C volumes are therefore 42.3 mmbbls.

 

Trinity is listed on the AIM market of the London Stock Exchange under the ticker TRIN.

 

OPERATIONS REVIEW

 

The refinancing and restructuring completed in January 2017 allowed our operational team to refocus its efforts from maintaining base production to incrementally growing production to accelerate value extraction from the asset base. With minimal spend on asset integrity and base well maintenance in 2016, revitalisation of production in a safe and efficient manner required a methodical approach in Q1 2017.  One impediment Trinity faced in Q2 2017 was the passage of Tropical Storm Bret in June 2017 which temporarily impacted our operations. The operations team met the challenge and production growth continued. Having created growth  momentum in H1 2017, Trinity is positioned to progress with delivery of the planned H2 2017 activity set across its portfolio via a series of low cost, high return activities inclusive of RCPs, re-activations, WOs and swabbing.

 

Onshore operations

·     H1 2017 average like-for-like net production exclusive of the Guapo block was 1,278 bopd (H1 2016: 1,383 bopd). The 8% decrease in production volumes resulted mainly from natural decline rates.  

·     H1 2017 work programme involved the completion of 5 RCPs, 34 WOs and 4 re-activations (H1 2016: 33 workovers and no reactivations);

·     H2 2017 planned work programme anticipates, at least, an additional 30 RCPs, 15 reactivations, 27 WOs and increased swabbing across all fields.  Additional rigs have been procured to support the increased activity set.  Further to this, work continues in parallel to expand the number of drill-ready infill well locations.

 

East Coast operations

·     H1 2017 average production was 909 bopd (H1 2016: 1,018 bopd).  The 11% decrease in production was largely the result of natural production decline;

·     H1 2017 work programme comprised 5 WOs (H1 2016: nil), one of which was the installation of an MPHU in June 2017.  This is the first offshore installation of an MPHU on a slanted wellhead and the well has since produced at a consistent rate and continues to be monitored. Priority on infrastructure projects during H1 2017 included; the Bravo crane upgrade and recertification works, replacement of the Galeota tank farm fire water pump, Trintes crane assessments and installation of additional diesel storage;

·     H2 2017 planned work programme anticipates 11 reactivations and 3 WOs to maintain and optimise base production levels. Infrastructure projects for H2 2017 comprise; Alpha crane boom change out and phase one of the installation of a new 10,000 bbl tank.  H2 2017 activities also being progressed include:

      -  Continuation of the geological, geophysical and engineering review of the Trintes infill drilling programme                     and the development plan for TGAL and wider Galeota Ridge

      -  Demobilisation of Trinity's slant drilling rig in preparation for; inspection, repair and upgrade for future                     drilling.

 

West Coast operations

·     H1 2017 average net production was 210 bopd (H1 2016: 211 bopd). Production was maintained from the previous year as a result of a pipeline change-out programme completed in the Brighton Marine field in the latter part of Q4 2016, resulting in a production increase of c. 55 bopd which was realised in H1 2017;

·     H1 2017 work programme entailed 1 workover (H1 2016: nil) and the commencement of asset integrity infrastructure projects;

·     H2 2017 planned work programme anticipates 4 reactivations to maintain and grow production levels and the continuation of asset integrity related projects.

 

 

 

 

 

 

 

FINANCIAL REVIEW

 

Income Statement Analysis

 

 

H1 2017

H1 2016

D Change

Production

 

 

 

Average realised oil price (USD/ bbl)

46.3

32.8

13.5

Average Net production (bopd)1

2,397

2,612

(215)

 

 

 

 

Statement of Comprehensive Income

USD'000

USD'000

USD'000

Operating Revenues

20,180

16,074

4,106

Operating Expenses2 (excluding DD&A3)

(14,695)

(14,569)

(126)

Operating profit before DD&A

5,485

1,505

3,980

DD&A

(3,551)

(2,450)

(1,101)

Consolidated operating profit/(loss)

1,934

(945)

2,879

Exceptional items

25,123

1,064

24,059

Operating profit/(loss) after exceptional items

27,057

119

26,938

Finance Cost

(1,177)

(1,763)

586

Profit/(loss) before income tax

25,880

(1,644)

27,524

Income tax expense

(2,452)

143

(2,595)

Profit/(loss) after income tax

23,428

(1,501)

24,929

Currency translation

352

(25)

377

Total Comprehensive income/(expense)

23,780

(1,526)

25,306

 

Notes: 

1.     Average net production for H1 2016 is exclusive of the Guapo block which illustrates a like-for-like comparative.

2.     Operating Expenses: Royalties, Production Costs, G&A and other operating expenses

3.     DD&A: Depreciation, Depletion and Amortisation

 

Operating Revenues

 

Operating revenues of USD 20.2 million (H1 2016: USD 16.1 million). The USD 4.1 million increase was mainly as a result of an increase in average realised crude prices.

 

Operating Expenses

 

Operating expenses of USD (18.2) million (H1 2016: USD (17.0) million) comprised of the following:

            ·     Royalties of USD (5.9) million (H1 2016: USD (4.0) million)

            ·     Production costs ("OPEX") of USD (6.7) million (H1 2016: USD (8.7) million)

            ·     DD&A charges of USD (3.6) million (H1 2016: USD (2.5) million)

                ·      G&A expenditure of USD (1.6) million (H1 2016: USD (1.8) million)

                ·      Other operating expenses of USD (0.4) million (H1 2016: nil) include Fair Value adjustments to Put Options                 related to commodity hedge

 

Operating Profit/ (Loss)

 

The operating profit (before exceptional items) for the period amounted to USD 1.9 million (H1 2016: USD (0.9) million loss) and was mainly driven by an increase in crude oil prices and a lower operating cost structure.

 

 

Exceptional items

 

Exceptional items of USD 25.1 million (H1 2016: USD 1.1 million) related to:

·     Unsecured creditor balances compromise following the successful creditor proposal filed and approved by the High Court of Trinidad and Tobago, which saw USD 15.5 million in Trade and other payables being written off

·     Citibank loan compromise, which allowed a USD 6.5 million write off on the USD 10.0 million debt

·     Board of Inland Revenue of Trinidad and Tobago ("BIR") agreement to write off USD 5.2 million of Interest on Taxes

·     Gain on extinguishment of financial liability of MEEI USD 0.2 million

·     Net foreign exchange loss on compromised balances of USD (0.7) million

·     Impairment of oil and gas assets of USD (0.7) million

·     Restructuring costs incurred, net of amounts provided of USD (0.6) million

·     Impairment of receivables of USD (0.3) million 

 

Net Finance Cost

 

Finance cost for the period totaled USD (1.2) million (H1 2016: USD (1.8) million), made up of:

·     Unwinding of the discount rate on the decommissioning provision of USD (0.8) million (H1 2016: USD (0.8) million)

·     Interest on taxes of nil (H1 2016: USD (0.5) million)

·     Interest on loans: USD (0.4) million (H1 2016: USD (0.4) million)

Accrued interest on CLN H1 2017 of USD (0.3) million (H1 2016: nil)

Interest expense on loan facilities from Citibank (Trinidad & Tobago) Limited USD (0.1) million (H1 2016: USD (0.4) million)

 

Taxation

 

Taxation charge for the period was USD (2.5) million (H1 2016: 0.1 million) which is made up of:

·     De-recognition of deferred tax assets of USD (2.8) million (H1 2016: nil)

·     Decrease in deferred tax liability of USD 0.4 million (H1 2016: USD 0.0 million)

·     Unemployment Levy of USD (0.1) million (H1 2016: USD (0.3) million)

·     Supplemental Petroleum Tax: nil (H1 2016: USD 0.4 million credit)

 

As at 30th June 2017, the Group has unrecognised income tax losses of USD 205.1 million which have no expiry date.

 

Total Comprehensive Income/ (Expenses)

 

Total Comprehensive Profit for the period was USD 23.8 million (H1 2016: USD (1.5) million loss)

 

 

 

Cash Flow Analysis

 

Summary of Statement of Cash Flows

 

 

 

 

H1 2017

H1 2016

FY 2016

 

USD'000

USD'000

USD'000

Opening Cash Balance

7,615

8,200

8,200

 

 

 

 

Cash Movement

 

 

 

Net cash (outflow)/inflow from operating activities

(5,458)

(1,097)

8,987

Net cash outflow from investing activities

(650)

(24)

(266)

Net cash inflow/(outflow)from financing activities

10,025

(1,967)

(6,206)

Increase/ (decrease) in cash and cash equivalents

3,917

(3,088)

2,515

 

 

 

 

Less: Funds held for abandonment

--

--

(3,100)

Closing cash balance

11,532

5,112

7,615

 

Opening Cash Balance

 

Trinity began the year with an initial cash balance of USD 7.6 million (2016: USD 8.2 million).

 

Operating Activities

 

Trinity's net cash outflow from operating activities was USD (5.4) million (H1 2016: USD (1.1) million).  H1 2017 included USD 8.6 million in relation to the restructuring in the form of settlement payments to unsecured creditors (trade creditors, Petrotrin, BIR and MEEI) and quarterly payments (BIR and MEEI) in line with the creditors' proposal.

 

Investing Activities

 

Trinity incurred capital expenditures mainly on production related capex conducted on onshore assets  and infrastructure related capex conducted on the west and east coast assets totaling  USD 0.7 million (H1 2016: USD 0.0 million). 

 

Financing Activities

 

H1 2017 saw the refinancing of Trinity through the placing of ordinary shares and issue of an unsecured CLN.  The funding from these activities were used in settling outstanding debt and unsecured creditor balances in accordance with the proposal and settlement agreements.  Net inflows from financing activities were USD 10.0 million which comprised of:

·      Issue of ordinary shares from the Placing (net of costs) USD 10.8 million

·      Net proceeds from CLN USD 3.0 million

·      Repayment of borrowings USD (3.5) million (H1 2016: USD (1.1) million)

·      Finance costs USD (0.3) million (H1 2016: USD (0.9) million)

 

Closing Cash Balance

 

Trinity's cash balance at 30th June 2017 was USD 11.5 million (H1 2016: USD 5.1 million).

 

 

 

 

 

APPENDIX 1: TRADING SUMMARY

 

A summary of realised price, production, operating break-evens, Opex and G&A expenditure metrics is set out below:

 

Trading Summary Table

 

Details

H1 2017

H1 2016

% Change

 

 

 

 

Realised Price (USD/bbl)

46.3

32.8

41

Production (bopd)

 

 

 

Onshore*

        1,278

1,383

(8)

West Coast

           210

           211

(0)

East Coast

           909

        1,018

(11)

Consolidated

        2,397

        2,612

(8)

 

 

 

 

Operating Break-even (USD/bbl

 

 

 

Onshore

16.1

17.8

(10)

West Coast

29.0

34.9

(17)

East Coast

23.2

30.1

(23)

Consolidated

28.2

           29.9

(6)

 

 

 

 

Metrics (USD/bbl)

 

 

 

Opex/bbl - Onshore

10.8

12.0

(10)

Opex/bbl - West Coast

24.0

29.1

(18)

Opex/bbl - East Coast

17.6

23.0

(23)

G&A/bbl - Consol

3.8

3.9

(3)

 

Note (*): Both years are exclusive of the Guapo block. Production inclusive of the Guapo block will be 1,430 bopd with consolidated production of 2,659 bopd with a resultant Onshore Operating Break-even USD 18.4/bbl) and Onshore Opex/bbl at USD 12.4/bbl

                                                 

 

 

 

 

 

 

 

 

APPENDIX 2: NET CASH/ (DEBT) CALCULATION

 

Balance Sheet Extract

H1 2017

H1 2017

H1 2016

FY 2016

 

USD MM

USD MM

USD MM

USD MM

 

Unaudited1

 

 

Unaudited

Mgmt. View2

 

Unaudited

 

 

Audited

 

 

A: Current Assets

 

 

 

 

Cash and cash equivalents

               11.5

               11.5

                5.1

                 7.6

Trade and other receivables

                  3.7

                  3.7

                9.6

                 5.5

Inventories

                  3.7

                  3.7

                3.9

                 3.8

Derivative financial instrument

                  0.2

                  0.2

                    - 

                    - 

Total Current Assets

               19.1

               19.1

              18.6

              16.9

 

 

 

 

 

B: Liabilities

 

 

 

 

Non-current

 

 

 

 

Trade and other payables

                  1.6

                  1.8

                    - 

                    - 

Taxation payable

                  3.6

                  3.6

                    - 

                    - 

Convertible loan note

                  2.7

                  6.8

                    - 

                    - 

Total Non-Current Liabilities3

                  7.9

               12.2

                    - 

                    - 

 

 

 

 

 

Current

 

 

 

 

Trade and other payables

                  4.2

                  4.3

              28.6

              34.0

Taxation payable

                  3.8

                  3.8

              12.3

              10.9

Borrowings

                     - 

                     - 

              12.0

              10.0

Total Current Liabilities4

                  8.0

                  8.1

              52.9

              54.9

Total Liabilities

               15.9

               20.3

              52.9

              54.9

 

 

 

 

 

(A-B): Net cash/(debt) position

                  3.2

                (1.2)

            (34.3)

             (38.0)

 

Notes:

1.     States the amortised cost of the CLN and MEEI liabilities as stated in the Financials (see notes 2, 15 and 17 to the financial statements)

2.     States the Face Value of the CLN and MEEI liabilities as opposed to amortised cost stated in the Financials

3.     Non-Current Liabilities excludes Deferred tax liability & Provision for other liabilities

4.     Current Liabilities excludes Provision for other liabilities

 

 

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

 

 

Bruce A. I. Dingwall, CBE

Executive Chairman

 

 

 

  

Trinity Exploration & Production plc

 

Condensed Consolidated Statement of Comprehensive Income

for the period ended 30th June 2017

(Expressed in United States Dollars)

 

 

Notes

6 months to 30th June 2017

 

6 months to 30th June 2016

 

Year ended  December 2016

 

 

 

$'000

 

$'000

 

$'000

 

 

(unaudited)

 

(unaudited)

 

(audited)

Operating Revenues

 

 

 

 

 

 

Crude oil sales

 

20,120

 

16,074

 

35,303

Other income

 

60

 

--

 

--

 

 

20,180

 

16,074

 

35,303

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

Royalties

 

(5,906)

 

(4,043)

 

(9,326)

Production costs

 

(6,759)

 

(8,699)

 

(15,569)

Depreciation, depletion and amortisation

7

(3,551)

 

(2,450)

 

(9,539)

General and administrative expenses

 

(1,630)

 

(1,827)

 

(4,154)

Other operating expenses

2

(400)

 

--

 

--

 

 

(18,246)

 

(17,019)

 

 

(38,588)

 

 

 

 

 

 

 

Operating Profit/(Loss) before Exceptional Items

 

1,934

 

(945)

 

(3,285)

 

 

 

 

 

 

 

Exceptional items

4

25,123

 

1,064

 

(1,675)

 

 

 

 

 

 

 

Finance Cost

6

(1,177)

 

(1,763)

 

(4,733)

 

 

 

 

 

 

 

Profit/(Loss) Before Taxation

 

25,880

 

(1,644)

 

(9,693)

 

 

 

 

 

 

 

Taxation (Charge)/Credit

5

(2,452)

 

143

 

2,829

 

 

 

 

 

 

 

Profit/(Loss) for the period

 

23,428

 

(1,501)

 

(6,864)

 

 

 

 

 

 

 

Other Comprehensive Income/(Expense)

 

 

 

 

 

 

Currency Translation

 

352

 

(25)

 

(112)

 

 

 

 

 

 

 

Total Comprehensive Income/(Expense) for the period

 

23,780

 

(1,526)

 

(6,976)

 

 

 

 

 

 

 

 

 

Earnings per share (expressed in dollars per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

18

0.09

 

(0.02)

 

(0.07)

Diluted

18

0.07

 

(0.02)

 

(0.07)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trinity Exploration & Production plc

 

Condensed Consolidated Statement of Financial Position

for the period ended 30th June 2017

(Expressed in United States Dollars)

 

 

Notes

As at 30th June 2017

As at 30th June 2016

As at 31st December 2016

ASSETS

 

$'000

$'000

$'000

 

 

(unaudited)

(unaudited)

(audited)

Non-current Assets 

 

 

 

 

Property, plant and equipment

7

48,202

58,600

59,632

Intangible assets

8

25,362

25,823

25,406

Abandonment fund

 

1,135

--

1,072

Performance bond

 

253

--

--

Deferred tax asset

12

2,665

2,375

5,496

 

 

77,617

86,798

91,606

Current Assets

 

 

 

 

Inventories

 

3,730

3,894

3,787

Trade and other receivables

9

3,658

9,587

5,449

Derivative financial instrument

10

200

--

--

Cash and cash equivalents

 

11,532

5,112

7,615

 

 

19,120

18,593

16,851

      Assets held-for-sale

 

7,696

11,039

--

 

 

26,816

29,632

16,851

Total Assets

 

104,433

116,430

108,457

 

 

 

 

 

Equity

 

 

 

 

Capital and Reserves Attributable to Equity Holders

 

 

 

 

Share capital

13

96,676

94,800

94,800

Share premium

13

125,362

116,395

116,395

Share warrants

 

71

71

71

Other Equity

15

590

--

--

Share based payment reserve

 

12,247

12,178

12,244

Reverse acquisition reserve

 

(89,268)

(89,268)

(89,268)

Merger reserves

 

75,467

75,467

75,467

Translation reserve

 

(1,645)

(1,583)

(1,997)

Accumulated (deficit)

 

(172,429)

(190,518)

(195,857)

Total Equity

 

47,071

17,542

11,855

 

 

 

 

 

Non-current Liabilities

 

 

 

 

Trade and other payables

17

1,640

--

--

Taxation payable

5

3,634

--

--

Convertible loan note

15

2,729

--

--

Deferred tax liability

12

2,503

3,161

2,927

Provision for other liabilities

16

26,348

28,858

38,318

 

 

36,854

32,019

41,245

Current Liabilities

 

 

 

 

Trade and other payables

17

4,210

28,555

34,009

Taxation payable

5

3,794

12,331

10,928

Borrowings

14

--

11,950

9,950

Provision for other liabilities

16

106

1,863

470

 

 

8,110

54,699

55,357

      Liabilities held-for-sale

11

12,398

12,170

--

 

 

20,508

66,869

55,357

Total Liabilities

 

57,362

98,888

96,602

Total Shareholders' Equity and Liabilities

 

104,433

116,430

108,457

 

Trinity Exploration & Production plc

 

Condensed Consolidated Statement of Changes in Equity

for the period ended 30th June 2017

(Expressed in United States Dollars)

 

 

Share Capital

Share Premium

Share Warrant

Other Equity

Share Based Payment Reserve

Reverse Acquisition Reserve

Merger Reserve

Translation Reserve

Accumulated Deficit

Total

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 30th June 2016 (unaudited)

 

94,800

 

116,395

 

71

 

--

 

12,178

 

(89,268)

 

75,467

 

(1,583)

 

(190,518)

 

17,542

Share based payment charge

--

--

--

--

66

--

--

--

--

66

Translation difference

--

--

--

--

--

--

--

(302)

--

(302)

Total comprehensive expense for the period

--

--

--

--

--

--

--

(112)

(5,339)

(5,451)

Balance at end of 2016 (audited)

 

94,800

 

116,395

 

71

 

--

 

12,244

 

(89,268)

 

75,467

 

(1,997)

 

(195,857)

 

11,855

 

 

 

 

 

 

 

 

 

 

 

Share based payment charge

--

--

--

--

3

--

--

--

--

3

Other equity net of transaction cost

--

--

--

590

--

--

--

--

--

590

Issue of ordinary shares

1,876

8,967

--

--

--

--

--

--

--

10,843

Total comprehensive income for the period

--

--

--

--

--

--

--

352

23,428

23,780

Balance at 30th June 2017 (unaudited)

 

96,676

 

125,362

 

71

 

590

 

12,247

 

(89,268)

 

75,467

 

(1,645)

 

(172,429)

 

47,071

 

Trinity Exploration & Production plc

 

Condensed Consolidated Cashflow Statement

for the period ended 30th June 2017

(Expressed in United States Dollars)

 

 

Notes

6 months to 30th June 2017

6 months

to 30th June 2016

Year ended 31st December 2016

 

 

$'000

$'000

$'000

 

 

(unaudited)

(unaudited)

(audited)

Operating Activities

 

 

 

 

Profit/(Loss) before taxation

 

25,880

(1,644)

(9,693)

Adjustments for:

 

 

 

 

Translation difference

 

(735)

)

1,711

2,275

Finance cost

6

348

917

3,156

Share option expense

 

3

49

66

Finance cost - decommissioning provision

6

829

846

1,577

Depreciation, depletion and amortisation

7

3,551

2,450

9,539

Gain on disposal of Guapo-1

7

--

(963)

(954)

Impairment of property, plant and equipment

7

732

--

2,420

Release of provision for restructuring

 

--

--

(1,870)

Release of provision for claim

 

--

--

(1,218)

Other provisions

 

--

--

712

Impairment of payables

 

--

(447)

(157)

Impairment of receivables

4

348

--

1,071

Gain on extinguishment of financial liabilities

4

(210)

--

--

Unsecured creditors' claims

 

--

--

697

Compromised creditor balances

4

(26,568)

--

--

 

 

4,178

2,906

7,621

 

 

 

 

 

Changes In Working Capital

 

 

 

 

Inventory

 

57

68

26

Assets held for sale

11

--

1,926

1,896

Decrease/(Increase)Trade and other receivables

 

451

(3,774)

(746)

(Decrease)/IncreaseTrade and other payables

 

(7,577)

(681)

1,741

 

 

(2,891)

445

10,538

 

 

 

 

 

Taxation paid

 

(2,567)

(1,542)

(1,551)

Net Cash Inflow/ (Outflow) From Operating Activities

 

 (5,458)

 (1,097)

 

8,987

 

 

 

 

 

Investing Activities

 

 

 

 

Purchase of  property, plant & equipment

7

(650)

(24)

(266)

Net Cash Inflow/(Outflow) From Investing Activities

 

(650)

(24)

 

(266)

 

 

 

 

 

Financing Activities

 

 

 

 

Finance cost

6

(348)

(917)

(3,156)

Issue of shares (net of costs)

13

10,843

--

--

Issue of convertible notes (net of costs)

15

3,030

--

--

Repayments of borrowings

14

(3,500)

(1,050)

   (3,050)

 

Net Cash Inflow/(Outflow) From Financing Activities

 

10,025

(1,967)

 

(6,206)

 

 

 

 

 

Increase/ (Decrease) in Cash and Cash Equivalents

 

3,917

(3,088)

2,515

Cash And Cash Equivalents

 

 

 

 

At beginning of period

 

7,615

8,200

8,200

Less funds held for abandonment

 

--

--

(3,100)

Increase/(Decrease)

 

3,917

(3,088)

2,515

At end of period

 

11,532

5,112

7,615

 

Trinity Exploration & Production plc

 

Notes to the Condensed Consolidated Financial Statements for the period ended 30th June 2017

 

1   Background and Accounting Policies

 

     Background

 

Trinity Exploration & Production plc ("Trinity") is incorporated and registered in England and trades on the Alternative Investment Market ("AIM"), a market operated by London Stock Exchange plc.  Trinity ("the Company") and its subsidiaries (together "the Group") are involved in the exploration, development and production of oil reserves in Trinidad.

 

Basis of Preparation
 

These condensed interim financial statements for the six months ended 30th June 2017 have been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union ("EU"), 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 2016, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

 

The results for the six months ended 30th June 2017 and 30th June 2016 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 2016 were approved by the board of directors and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified.

 

Going Concern

 

In making their going concern assessment, the Directors have considered the Group's budget and cash flow forecasts.  On the 11th January 2017 the Group was able to secure a refinancing solution enabling the Company to retire its existing senior debt facility (see note 14), reduce outstanding payables to unsecured trade creditors, significantly modify repayment terms to state creditors namely the Board of Inland Revenue ("BIR") and the Ministry of Energy and Energy Industry ("MEEI") (see notes 5&17) and provide sufficient additional capital through the issuing of ordinary shares and a convertible loan note ("CLN")  to continue operating (see notes 13 and 15 respectively).  As part of the refinancing significant balances were compromised with the senior debt holder and with the Group's unsecured creditors in accordance with the senior debt settlement and unsecured creditor settlement agreements.  

 

Subsequent to the refinancing the Group meets its day-to-day working capital requirements through revenue generation and positive operating cash flows.  The Group's forecast and projections, taking account of reasonable possible changes in oil price and sales volume, show that the group should be able to operate within the level of its current cash resources. For these reasons, the Board of Directors have a reasonable expectation that the group has adequate resources to continue operational existence for the foreseeable future.  The Group therefore continues to adopt the going concern basis of preparing the financial statements. 

 

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 2016, 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 and the other policies outlined below.  The business is not affected by seasonality.

 

     There are no IFRS or IFRS Interpretations Committee ("IFRIC") interpretations that are effective for the first time for the financial year beginning on or after 1st January 2017 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 Condensed Consolidated Financial Statements for the year ended 31st December 2016.

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 continued 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.

Compound Financial Instruments

     Compound financial instruments issued by the group comprise convertible notes that can, in certain circumstances, be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.  The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option.  The equity component is recognised initially as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component.  Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.  Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest rate method.  The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.           

     Trade and other payables

 

     Trade and other payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers.  Accounts payable are classified as current liabilities if payment is due within one year or less.  If not, they are presented as non-current liabilities.  Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

 

Derivative financial Instruments and hedging activities

 

The company has not applied hedge accounting and all derivatives are measured at fair value through profit and loss.

 

     Financial assets at fair value through profit or loss financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

 

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 2016, which can be found at www.trinityexploration.com.  On 1st April 2017 a put option was put in place which hedged a portion of the Group's production against downside movement in crude oil price below $40.00/bbl. The introduction of a put option is the only new change in any risk management policies or management since the year end. 

 

    

 

 

     Liquidity risk

     Compared to year end, there were changes in the contractual undiscounted cash out flows for certain financial liabilities as follows:

Borrowings of $10.0 million due to Citibank Trinidad and Tobago Limited was fully settled in accordance with the senior debt settlement agreement.

Outstanding trade payables were compromised and settled in accordance with the unsecured creditor settlement agreement.

Taxes due to the BIR were significantly modified following the restructuring of the Group in January 2017.  Interest on taxes of $5.2 million were compromised and a repayment term over 10 quarters were agreed.

Payables to the MEEI were significantly modified following the restructuring of the Group in January 2017.  The terms of repayment of these financial liabilities has been substantially modified from the original financial liability, the transaction was accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability was recognised at fair value by discounting the future cash outflows at 10% discount rate with a gain recognised through the Condensed consolidated statement of comprehensive Income.

 

Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method.

The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

 

The following table presents the group's financial assets and liabilities that are measured at fair value at 30 June 2017.

 

 

Level 1

Level 2

Level 3

Total

 

$'000

$'000

$'000

$'000

Assets

 

 

 

 

Put options

 

 

200

200

Total assets

-

-

200

200

 

 

 

 

 

The group had no financial assets and liabilities measured at fair value at 31st December 2016.

 

Fair value measurements using significant unobservable inputs (Level 3)

 

 

Put options

 

$'000

1st January 2017

--

Purchased put options

600

(Losses)/gain recognised

(400)

Accretion

--

Payments

--

30th June 2017

200

 

For put options at fair value through the profit or loss, an assessment of oil price movement in terms of the volatility at 30 June 2017 was done recognising a loss of $0.4 million (2016: nil) included within 'Other operating costs' in the Condensed consolidated statement of comprehensive income.

 

     Group's valuation processes

 

The group's finance department includes a team that performs the valuations of financial assets required for financial reporting purposes, including Level 3 fair values. This team reports directly to the Chief Financial Officer ("CFO") who in turn reports to the Audit Committee ("AC"). Discussions of valuation processes and results are held between the CFO, AC and the valuation team at least twice per year, in line with the group's interim reporting dates.

 

 

 

 

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 Condensed Consolidated Statement of Comprehensive Income. An analysis of the amounts presented as exceptional items in these financial statements are highlighted below.

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

Secured creditor compromise

 (6,450)

 --

 --

Interest on tax compromise

 (5,249)

 --

 --

Unsecured creditors' compromise

 (15,532)

 --

 --

Foreign exchange loss on compromised balance

663

 --

 --

Impairment of property, plant & equipment - FZ 2

 732

 --

 2,420

Impairment of receivable

 348

 --

 1,071

Restructuring

 577

 350

 940

Gain on extinguishment of financial liabilities

 (210)

 --

 --

Gain on disposal of Guapo-1

  --

 (963)

 (954)

Other provisions

 --

 --

 712

Unsecured creditor claims

 --

 --

 545

Release of provision - potential claim

 --

 --

 (1,218)

Provision for restructuring

 -- 

 -- 

 (1,870)

Impairment of payables

 --

 (447)

 --

Translation difference

 (2)

 (4)

 11

 

 

 

 

 

(25,123)

(1,064)

1,657

 

Exceptional items related to:

      -  Secured creditor compromise - $ 6.5 million gain under the senior debt settlement agreement where the unpaid              balance was compromised  

      -  Interest on tax compromise - $ 5.2 million gain under the creditor settlement where interest outstanding was waived              with the Board of Inland Revenue ("BIR")

      -  Unsecured creditors' compromise - $ 15.5 million  gain under the creditor settlements arising from compromised              balances with suppliers

      -  Foreign exchange loss on compromised balance - $ 0.7 million  charge under the creditor settlements arising from              compromised balances with suppliers

      -  Impairment of property, plant & equipment - $ 0.7 million charge resulting from an impairment loss on the FZ 2 asset

      -  Impairment of receivable - $ 0.3 million charge resulting from impairment of deal cost VAT recoverable from 2013

      -  Restructuring - $ 0.6 million charge as a result of field restructuring costs incurred

      -  Gain on extinguishment of financial liabilities - $ 0.2 million gain due to the modification in payment terms with the              MEEI.  The old liability of $ 2.1 million was extinguished and a new liability of $ 1.9 million was recorded at fair              value, the difference being the gain recognised

 

 

5   Taxation Charge/ (Credit)

a.   Taxation Charge

30th June 2017

30th June 2016

31st December 2016

Current tax

$'000

$'000

$'000

- Current period

 

 

 

Petroleum profits tax

44

307

1,533

Corporation tax

--

--

27

Supplemental petroleum tax

--

(418)

(951)

 

 

 

 

Deferred tax

 

 

 

- Current period

 

 

 

Movement in asset due to tax losses

2,822

--

(3,036)

Movement in liability due to accelerated tax depreciation

(392)

(32)

(381)

Unwinding deferred tax on Fair Value uplift

(27)

--

--

Translation differences

5

--

(21)

Tax charge/(credit)

2,452

(143)

(2,829)

    

The Group has a deferred tax asset of $2.7 million on its Condensed Consolidated Statement of Financial Position which it expects to recover in more than 12 months based on the expected taxable profits generated by Group companies.

 

   

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

b.   Taxation payable current

 

 

 

Petroleum Profits Tax/ Unemployment Levy

86

1,464

2,233

Corporation Tax

--

539

508

Supplemental Petroleum Tax

3,708

10,328

8,187

Taxation payable

3,794

12,331

10,928

c.   Taxation payable non-current

 

 

 

Petroleum Profits Tax/ Unemployment Levy

2,222

--

--

Corporation Tax

508

--

--

Supplemental Petroleum Tax

904

--

--

Taxation payable

3,634

--

--

 

The Taxation payable has been split between current and non-current and represents the principal balance owed to the BIR.  The amount agreed with the BIR and outstanding at the point of restructuring was $10.9 million of which $3.5 million has been repaid for the period ended 30th June 2017 with the remaining balance of $7.4 million repayable over 9 quarters commencing September 2017.  The interest portion outstanding on taxes are classified within current and non-current trade and other payables see note 17.

 

6   Finance Cost

 

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

Decommissioning

829

845

1,577

Interest on taxes

--

428

2,215

Interest on loans

348

490

941

 

 

1,177

 

1,763

 

4,733

 

 

 

7   Property, Plant and Equipment

 

 

Land & Buildings

Oil & Gas Property

Plant & Equipment

Other

Total

 

$'000

$'000

$'000

$'000

$'000

Opening net book amount at 1st January 2017

1,890

53,541

4,201

--

59,632

Additions

1

622

27

--

650

Disposal

(9)

--

--

--

(9)

Impairment1

--

(732)

--

--

(732)

Depreciation, depletion and amortisation charge for period

(76)

(3,170)

(305)

--

(3,551)

Transferred to disposal group held for sale

(108)

(7,401)

(187)

--

(7,696)

Translation difference

(1)

(84)

(7)

--

(92)

Closing net book amount 30th June 2017

1,697

42,776

3,729

--

48,202

 

 

 

 

 

 

Period ended 30th June 2017

 

 

 

 

 

Cost

      3,125

273,230

     12,884

336

289,575

Accumulated depreciation, depletion, amortisation and impairment

     (1,427)

     (230,370)

      (9,148)

(336)

 (241,281)

Translation difference

         (1)

(84)

        (7)

--

     (92)

Closing net book amount 30th June 2017

1,697

42,776

3,729

--

48,202

 

 

Land & Buildings

Oil & Gas Property

Plant & Equipment

Other

Total

 

$'000

$'000

$'000

$'000

$'000

Opening net book amount at 1st January 2016

1,629

40,548

3,966

--

46,143

Additions

--

--

24

--

24

Depreciation, depletion and amortisation charge for period

(80)

(2,058)

(312)

--

(2,450)

Transferred from disposal group held for sale

279

15,988

226

--

16,493

Translation difference

(49)

(1,457)

(104)

--

(1,610)

Closing net book amount 30th June 2016

1,779

53,021

3,800

--

58,600

 

 

 

 

 

 

Period ended 30th June 2016

 

 

 

 

 

Cost

2,975

264,461

12,232

--

279,668

Accumulated depreciation, depletion, amortisation and impairment

(1,147)

(209,983)

(8,328)

--

(219,458)

Translation difference

(49)

(1,457)

(104)

--

(1,610)

Closing net book amount 30th June 2016

1,779

53,021

3,800

--

58,600

 

 

 

Land & Buildings

Oil & Gas Assets

Plant & Equipment

Other

Total

 

$'000

$'000

$'000

$'000

$'000

Year ended 31st December 2016

 

 

 

 

 

Opening net book amount at 1st January 2016

1,629

40,548

3,966

--

46,143

Additions

--

247

19

--

266

Disposal

--

--

(16)

--

(16)

Impairment

--

(2,420)

--

--

(2,420)

Transferred from held for sale

399

26,361

831

--

27,591

Depreciation, depletion and amortisation charge for year

(176)

(8,722)

(641)

--

(9,539)

Translation difference

38

(2,473)

42

--

(2,393)

Closing net book amount 31st December 2016

1,890

53,541

4,201

--

59,632

 

At 31st December 2016

 

 

 

 

 

Cost

3,095

275,081

12,815

336

291,327

Accumulated depreciation, depletion, amortisation and impairment

(1,243)

(219,067)

(8,656)

(336)

(229,302)

Translation difference

38

(2,473)

42

--

(2,393)

Closing net book amount

1,890

53,541

4,201

--

59,632

 

 

 

 

 

 

 

1Impairment loss for one of the Cash Generating Units ("CGU") FZ 2 of $0.7 million was recognised during the period ended 30th June 2017. The recoverable amount was determined by estimating its fair value less costs of disposal. There were no impairment losses recognised in June 2016.

8   Intangible Assets

      

 

Exploration and evaluation assets

 

$'000

At 1st January 2017

25,406

Translation difference

(44)

At 30th June 2017

25,362

 

 

At 1st January 2016

26,751

Translation difference

(928)

At 30th June 2016

25,823

 

 

At 1st January 2016

26,751

Translation difference

(1,345)

At 31st December 2016

25,406

 

Exploration and evaluation assets related to the TGAL exploration well and field development plan.

 

9   Trade and Other Receivables

 

 

30th June 2017

30th June 2016

31st December 2016

Due within one year

$'000

$'000

$'000

Trade receivables

1,967

2,767

2,849

Prepayments

1,001

870

1,140

VAT recoverable

506

4,009

1,315

Other receivables

184

1,941

145

 

3,658

9,587

5,449

     

The fair value of trade and other receivables approximate their carrying amounts

 

10    Derivative financial instrument

 

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

 

Assets

Assets

Assets

Put Option-commodity price hedge

200

--

--

 

200

--

--

 

A put option was implemented on 1st April 2017 which hedged a portion of the Group's production against downside movements in crude oil price below $40.00/barrel. (See note 2)

 

11    Assets held for sale

 

The West Coast assets and liabilities holding the Group's oil and gas interest in the Brighton Marine and Point Ligoure-Guapo Bay-Brighton ("PGB") fields owned and operated by its indirect subsidiary Oilbelt Services Limited have been presented as held for sale. 

 

 

 

 

 

 

 

 

 

 

(a)  Assets of the disposal Group classified as held for sale

 

 

30th June 2017

30th June

2016

31st December 2016

Property, plant & equipment

$'000

$'000

$'000

Net Book Value at 1st January 2017

--

30,491

30,491

Disposal

--

(1,926)

(1,896)

Reclassified as property, plant & equipment

--

(16,493)

--

Transferred from/(to) property, plant & equipment

7,696

--

(27,591)

Translation difference

--

(1,033)

(1,004)

Closing balance

7,696

11,039

--

 

 

(b)  Liabilities of the disposal group classified as held for sale

 

30th June 2017

30th June

2016

31st December 2016

Other provisions

$'000

$'000

$'000

Decommissioning provision 1st January 2017

--

21,927

21,927

Reclassified as provision and other liabilities

--

(9,233)

--

Transferred from/(to) provision and other liabilities

12,398

--

(21,810)

Unwinding of discount rate

--

363

--

Disposal

--

(112)

(117)

Translation difference

--

(775)

--

Closing balance

12,398

12,170

--

 

In accordance with IFRS 5, the assets and liabilities held for sale criteria were met at the balance sheet date and the date that the Condensed Consolidated Financial Statements were authorised. 

 

12   Deferred Income Taxation

 

The analysis of deferred tax assets is as follows:

 

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

Deferred tax assets:

 

 

 

-Deferred tax assets to be recovered in more than 12 months

(2,665)

(2,375)

(5,496)

-Deferred tax assets to be recovered in less than 12 months

--

--

--

Deferred tax liabilities:

 

 

 

-Deferred tax liabilities to be settled in more than 12 months

2,503

3,161

2,927

-Deferred tax liabilities to be settled in less than 12 months

--

--

--

Net deferred tax (assets/)liability

(162)

786

(2,569)

 

 

The movement on the deferred income tax is as follows:

 

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

At beginning of year

(2,569)

848

848

Movement for the year

2,407

(32)

(3,417)

Translation difference

--

(30)

--

Net deferred tax (asset)/liability

(162)

786

(2,569)

 

 

 

 

 

 

Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net. The deferred tax balances are analysed below:

 

 

1st January 2016

Movement

30th June 2016

Movement

31st December 2016

Movement

30th June 2017

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Deferred tax assets

 

 

 

 

 

 

 

Acquisition

(33,436)

--

(33,436)

--

(33,436)

--

(33,436)

Tax losses recognised

(31,257)

85

(31,172)

(3,121)

(34,293)

--

(34,293)

Tax losses derecognised

62,233

--

62,233

--

62,233

2,831

65,064

 

(2,460)

85

(2,375)

(3,121)

(5,496)

2,831

(2,665)

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

1st January 2016

Movement

30th June 2016

Movement

31st December 2016

Movement

30th June 2017

Accelerated tax depreciation

14,374

--

14,374

--

14,374

(395)

13,979

Non-current asset impairment

(33,214)

--

(33,214)

--

(33,214)

 

--

(33,214)

Acquisitions

19,580

--

19,580

--

19,580

--

19,580

Fair value uplift

2,568

(147)

2,421

(234)

2,187

(29)

2,158

 

3,308

(147)

3,161

(234)

2,927

(424)

2,503

 

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable.  Deferred tax assets of $2.8 million have been derecognised (2016: $3.1 million was recognised) based on unavailable future taxable profits. Deferred tax liabilities have reduced by $0.4 million (2016: $0.4 million) as the carrying values of property, plant and equipment and intangible assets which gave rise to the temporary  differences have been written down to their recoverable amount.

 

The Group has unrecognised income tax losses amounting to $205.1 million which have no expiry date.

 

13    Share capital

 

 

 

Number of shares

Ordinary shares

$'000

Share premium

$'000

Total

 

$'000

As at 1st January 2016

 

94,799,986

94,800

116,395

211,195

Share Capital Reorganisation

 

187,600,000

1,876

8,967

10,843

As at 30th June 2017

 

282,399,986

96,676

125,362

222,038

 

     The Company effected a Share Capital Reorganisation "SCR" on the 11th January 2017 whereby each existing Ordinary Share was divided and converted into one new Ordinary Share of a nominal value of $0.01 each and one Deferred Share of a nominal value of $0.99 each.  The deferred shares have no voting or dividend rights and on a return of capital on a winding up has no valuable economic rights.  Subsequent to the SCR the company raised $11.7 million before expenses by issuing 187,600,000 new ordinary shares at a placing price of £0.0498.  The nominal value of the new ordinary shares are $0.01 each issued at a premium of $0.05 per share.

 

 

 

 

 

 

Share Capital and Share Premium

 

No. of Shares

Ordinary Shares

Deferred Shares

Share Premium

Total

 

 

 

$'000

$'000

$'000

$'000

As at 1st January 2016

1.00

94,799,986

94,800

--

116,395

211,195

Share capital reorganisation

1.00

(94,799,986)

(94,800)

--

--

(94,800)

New ordinary shares following the SCR

0.01

94,799,986

948

--

--

948

Deferred ordinary shares following SCR

0.99

--

--

93,852

--

93,852

New ordinary shares issued

0.01

187,600,000

1,876

--

--

1,876

Ordinary share premium

0.05

--

--

--

9,849

9,849

Cost of raising equity

 

--

--

--

(882)

(882)

 

 

282,399,986

2,824

93,852

125,362

222,038

Note: $:GBP rate 1.255:1

 

 

 

 

 

 

 

 

14    Borrowings

 

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

Current

--

11,950

9,950

Non-Current

--

--

--

 

--

11,950

9,950

 

Movements in borrowings are analysed as follows:

 

$'000

6 months ended 30th June 2017

 

Opening amount as at 1st January 2017

9,950

Repayment

(3,500)

Compromised balance

(6,450)

Closing amount as at 30th June 2017

--

 

 

6 months ended 30th June 2016

 

Opening amount as at 1st January 2016

13,000

Repayments of borrowings

(1,050)

Closing amount as at 30th June 2016

11,950

 

 

 

On the 23rd January 2017 the borrowings from secured lender Citibank Trinidad and Tobago Limited was repaid in full via the senior debt settlement agreement whereby an amount of $3.5 million plus interest was paid in lieu of full settlement on the outstanding balance owed of $10.0 million and the entire financial liability was extinguished.  The compromised balance of $6.5 million was recognised within exceptional items through the Condensed Consolidated Statement of Comprehensive Income.

 

 

 

 

 

15   Convertible Loan Note ("CLN")

 

On 11th January 2017 the Company issued at a 50% discount 6,550,000 one dollar, unsecured CLNs.  The notes mature 7 years from the issue date at their nominal value of $6.55 million plus quarterly accrued, aggregated and compounded interest at a rate of 7.25% per annum.  As at 30 June 2017, the nominal value plus accrued interest amounted to US$ 6.8 million.  Repayments or conversion prior to the maturity date can be made in certain circumstances:

 

•    Early Redemption

     Subject to the settlement of the debts owed to the BIR and the MEEI (see note 2, 5 b & c, 15) the Company can before the second anniversary of the CLN's issue date, redeem all or a portion of the CLN giving 5 business days' written notice to the Noteholder. The Noteholders do not have the option to convert under this arrangement.

 

•    Redemption

     The Company can, after satisfying the debts owed to the BIR and the MEEI or after two years from the issue dates (whichever is the latter), elect to redeem all the CLN before the maturity date. The redemption date in this scenario must not be less than 20 days from the Early Redemption Notice. The Noteholders can serve a Conversion Notice.

 

•    Conversion

     Each Noteholder can after the second anniversary of the issue date serve a Conversion Notice. The principal amount plus the outstanding interest shall be converted into new fully paid ordinary shares at a Conversion Price of $0.08125.

 

                 The fair values of the CLN's liability and equity component were determined at the issuance of the note.  The CLN recognised in the Statement of Financial Position was calculated as follows:

 

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

Nominal value of convertible loan note issued1

6,550

--

--

Issued at a 50% discount

(3,275)

--

--

Fair value of convertible loan note

3,275

 

 

Expenses incurred

(245)

--

--

Fair value of convertible loan note (net of costs)

3,030

--

--

Equity component

(590)

--

--

Liability component at initial recognition

2,440

--

--

Interest accrued2

289

--

--

Closing balance

2,729

--

--

     

Notes:

1.     The amount repayable on the CLN is the nominal value of $6.6 million plus accrued interest.

2.     Interest is calculated by applying the effective interest rate of 23.7 % to the liability component.

 

For accounting purposes, the CLN was initially recognised and measured at its fair value of $3.3 million.  The fair value of the liability component was determined using a market interest rate of 22.4% for an equivalent non-convertible bond at the issue date.  The liability is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of the notes. The remainder of the proceeds is allocated to the conversion option and recognised in shareholders' equity net of transaction cost, and not subsequently remeasured.

 

 

16    Provisions and Other Liabilities

 

Non-Current:

Potential  Claim

Decommissioning cost

Employee Retirement Benefit

Total

 

$'000

$'000

$'000

$'000

6 months ended 30th June 2017

 

 

 

 

Opening amount as at 1st January 2017

--

37,970

348

38,318

Unwinding of discount

--

829

--

829

Transferred to disposal groups held for sale (note 11)

--

(12,398)

--

(12,398)

Unwind of employee retirement provision

--

--

(348)

(348)

Translation differences

--

(53)

--

(53)

Closing balance as at 30th June 2017

--

26,348

--

26,348

 

 

 

 

 

6 months ended 30th June 2016

 

 

 

 

Opening amount as at 1st January 2016

1,270

18,561

--

19,831

Unwinding of discount

--

483

--

483

Transferred to disposal groups held for sale

(note11)

--

9,233

--

9,233

Translation differences

--

(689)

--

(689)

Closing balance as at 30th June 2016

1,270

27,588

--

28,858

 

 

 

 

 

 

Year ended 31st December 2016

 

 

 

 

Opening amount as at 1st January 2016

1,270

18,561

--

19,831

Transferred from other payables

--

--

118

118

Transferred from liabilities held for sale

--

21,810

--

21,810

Revision to employee retirement benefit

--

--

230

230

Unwinding of discount

--

1,577

--

1,577

Release of provision

(1,218)

--

--

(1,218)

Decommissioning contribution

--

(1,939)

 

(1,939)

Translation differences

(52)

(2,039)

--

(2,091)

Closing balance at 31st December 2016

--

37,970

 

 

 

348

38,318

 

Current:

 

Litigation claims

Restructuring Cost

 

Total

 

$'000

$'000

$'000

6 months ended 30th June 2017

 

 

 

Opening amount as at 1st January 2017

470

--

Litigation claims compromised

(364)

--

Closing balance as at 30th June 2017

106

--

106

 

 

 

 

6 months ended 30th June 2016

 

 

 

Opening amount as at 1st January 2016

--

1,930

1,930

Translation difference

--

(67)

(67)

Closing balance at 30th June 2016

--

1,863

1,863

 

 

 

 

Year ended 31st December 2016

 

 

 

Opening amount as at 1st January 2016

--

1,930

Release of provision for restructuring

--

(1,870)

Provision for litigation claims

470

--

470

Translation difference

--

(60)

(60)

Closing balance at 31st December 2016

470

--

470

 

 

 

 

17    Trade and Other Payables

 

30th June 2017

30th June 2016

31st December 2016

 

$'000

$'000

$'000

Non-current:

 

 

 

Due to BIR Interest on taxes1

970

--

--

Due to MEEI2

670

--

--

 

1,640

--

--

 

 

 

 

Current:

 

 

 

Trade payables

419

17,061

19,379

Accruals

1,503

2,320

2,677

VAT payable

129

184

187

Other payables

903

3,116

4,772

Due to BIR Interest on taxes1

775

4,944

6,994

Due to MEEI2

481

930

 

 

4,210

28,555

34,009

 

Notes:

1.     Due to the BIR is interest on taxes totaling $1.8 million. Principal taxes of $7.4 million is shown in note 5 b&c

2.     Financial liabilities due to the MEEI of $2.1 million were substantially modified based on the new terms of repayment.  This transaction was accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability of $1.9 million was recognised based on fair value (see note 2).  During the period $0.7 million was repaid with a nominal value of $1.4 million outstanding at 30th June 2017

 

On 6th January 2017 the High Court of Trinidad and Tobago approved the unsecured creditors' proposal allowing the Group to settle its outstanding liabilities with unsecured creditors in accordance with the unsecured creditor settlement agreement.  A total of $15.5 million in unsecured creditors and $ 5.2 million in interest on taxes due to the BIR were compromised in accordance with the unsecured creditor settlements see Exceptional items note 4.the settlement

 

 18   Earnings per Share

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of ordinary shares adjusted to assume the conversion of all dilutive potential ordinary shares.

 

Earnings - Total Comprehensive Income/(Loss) For The Period $'000

Weighted Average Number Of Shares '000

Earnings Per Share $

Period ended 30th June 2017

 

 

 

Basic

23,780

270,936 

0.09 

Impact of dilutive ordinary shares:

--

92,892 

(0.02) 

Diluted

23,780

363,828 

0.07 

 

 

 

 

Period ended 30th June 2016

 

 

 

Basic

(1,526)

94,800

(0.02)

Impact of dilutive ordinary shares:

--

--

--

Diluted

(1,526)

94,800

(0.02)

 

 

 

 

Year ended 31st December 2016

 

 

 

Basic

(6,976)

94,800

(0.07)

Impact of dilutive ordinary shares:

-- 

-- 

-- 

Diluted

(6,976)

94,800

(0.07)

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.  The Company has two categories of dilutive potential ordinary shares:  convertible loan notes and share options.  The convertible notes issued during the year are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share. This is calculated as the CLN nominal value $6.55 million plus accrued interest after the second anniversary $1.0 million divided by conversion price of $0.08125. Share options are considered potential ordinary shares. They have not been included in the determination of diluted earnings per share as the exercise hurdle would not have been met.

 

19    Contingent Liabilities

 

§ The farm-out agreement for the Tabaquite Block (held by Coastline International Inc.) has expired. There may be additional liabilities arising when a new agreement is finalised, but these cannot be presently quantified until a new agreement is available.

 

§ A Letter of Guarantee has been established over the PGB Block where a subsidiary of Trinity is obliged to carry out a Minimum Work Programme to the value of $8.4 million.  The guarantee shall be reduced at the end of each twelve month period upon presentation of all technical data and results of the Minimum Work Programme performed.  Trinity has submitted the technical data for reducing the performance guarantee and is still awaiting a response.

§ The Group is party to various claims and actions.  Management have considered the matters and where appropriate has obtained external legal advice.  No material additional liabilities are expected to arise in connection with these matters, other than those already provided for in these financial statements.

 

20    Events after the Reporting Period

 

On 11th August 2017 Trinity, entered into a binding sale and purchase agreement ("SPA") to sell its interests in the Brighton Marine and the PGB Exploration and Production Licences and related fixed assets to a subsidiary of AIM quoted Range Resources Trinidad Limited ("Range") for a cash consideration of $4.55 million. Together, the West Coast Assets constitute all of Trinity's West Coast Asset portfolio. The sale is subject to customary regulatory approvals, including Petrotrin and the MEEI. Under the terms of the transaction, Range has agreed to deposit the full consideration of $4.55 million into escrow to be released on completion. The transaction is expected to complete in the fourth quarter of 2017. The transaction is not considered to constitute a 'material disposal' which would trigger the conversion of the CLNs and the funds received will be used for general corporate purposes.

 

On 25th August 2017 Trinity announced the grant of options over 25,415,998 ordinary shares (representing 9.0% of the company's issued share capital) to the Executive Directors and other key employees under its Long Term Incentive Plan.  The performance targets relating to these options are detailed in that announcement.

 

 

 


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