Operational,Corporate,Financial & Strategic Update

RNS Number : 1882D

Trinity Exploration & Production

25 April 2017

 

25 April 2017

Trinity Exploration & Production plc

("Trinity" or "the Group" or "the Company")

Operational, Corporate, Financial & Strategic Update

Trinity, the independent E&P company focused on Trinidad and Tobago, today provides an update on its operations and financials for the year to 31 December 2016 and the first quarter ("Q1") 2017 as well as details on its future strategy for developing its attractive asset portfolio.

Operating Update

·     Group average net production volumes of 2,542 bopd for the year to 31 December 2016 (2015: 2,896 bopd)

·     Average realised price of US$39.4/bbl (2015: US$45.4/bbl)

·     High quality reservoirs, low natural decline rates and successful low-cost workovers continue to assist in maintaining production levels, despite the backdrop of reduced investment in 2016

·     Improved operating metrics (higher oil price and reduced operating costs) supported an increase in management estimated 2P reserves to 21.3 mmbbls as at 31 December 2016 (2015: 21.0 mmbbls) despite producing 0.9 mmbbls during the year and the Guapo field divestment (2P: 0.8 mmbbls)

·     For Q1 2017 daily production averaged c.2,500 bopd, a satisfactory performance given the reduced levels of investment in 2016

·     Contingent upon the prevailing oil price environment, and subsequent investment, net average production for 2017 is expected to be in the range of 2,600 - 2,800 bopd

·     Trinity is continuing to target an eventual run-rate closer to 3,000 bopd over the next 12 months (predominantly contingent upon the  results of the pending onshore infill drilling programme)

Corporate Update

·     Completion of successful fundraising in January 2017 of approximately US$15.0 million through an issue of shares (US$11.7 million) and convertible loan notes (US$3.3 million)

·     Successful execution of agreements with creditors to settle outstanding debts

·     All trade, senior debt and initial state creditor settlements have been made to the Trustee in accordance with the Proposal

·     Board significantly strengthened by the appointments of three new directors on completion of the fundraising: Jeremy N. Bridglalsingh (Executive) our current Chief Financial Officer, David A. Segel (Non-Executive) and Angus C. Winther (Non-Executive)

Financial Update*

·     As a direct result of lower oil prices, reduced operating and G&A costs and minimal capital expenditure, for the 12 months ending 31 December 2016:

o  Revenues of US$35.3 million (2015: US$48.2 million)

o  EBITDA of US$6.3 million (2015: US$1.2 million)

o  Loss after tax of US$7.0 million (2015: US$58.5 million loss)

o  Positive operating cash flow of US$9.0 million (2015: US$2.5 million)

·     Cash balance at end of December 2016 of US$7.6 million (2015: US$8.2 million)

·     Following the successful fundraising completed in January 2017, and payments of creditor settlements, cash balances at the end of February 2017 had increased to US$13.0 million

·     Creditor settlements have resulted in a reduction in like-for-like total pre-restructuring liabilities (outstanding debt plus current and non-current liabilities) from US$50.7m (as at 31 December 2016) to US$14.2m at the end of February 2017.  This includes amounts due to State Creditors (US$13.5m), which are due to be repaid in 10 quarterly instalments commencing in June 2017

·     To date, the Group has put hedging in place (through purchasing put options) which covers over 35% of the Group's production should the WTI oil price fall below US$40.0/bbl over the next 12 months  

·     The Board will continue to review the options available to further hedge its oil price exposure, as market conditions permit

*All figures for the financial year 2016 and Q1 2017 are unaudited

The Board currently expects to issue its preliminary results announcement on 2 May 2017, and to publish its annual report and accounts for the year to 31 December 2016 during May 2017, with the annual general meeting expected to take place in Edinburgh on 23 June 2017.

Strategic & Portfolio Update

As a result of the significant reduction in operating and G&A costs, and the resultant increased margins, the Company's plan to develop its asset base is attractive, even at relatively low oil prices.

Across Trinity's asset base the Company has identified clear pathways for value-creating production growth. Whilst the restructuring and re-alignment of the Company's cost base has created a much stronger platform for growth, the Board is mindful that it must continue to adhere to the disciplined approach to costs through the implementation of staged, risk-mitigated development activities. In the short-term, the Company has embarked upon a work programme to sustain the current production base via routine workovers, whilst growing current production levels from an existing wide inventory of opportunities from recompletions ("RCP"s) and reactivations on its current well stock.

A programme of 12 RCP's is planned for 2017 with 2 having already been undertaken and a further 4 expected to be completed before the end of June.  As the year progresses, the re-initiation of swabbing activities will take place alongside the drilling of new onshore wells from previously identified locations. This initial onshore drilling programme is expected to comprise of four new wells in each of the next two years, again subject to market conditions. Additionally, the Company anticipates capital expenditure works for planned repairs and maintenance to its equipment and infrastructure.

These combined activities have the potential to increase production from current levels of c. 2,500 bopd to an eventual target-rate of approximately 3,000 bopd within 12 months of completing the initial onshore infill well drilling programme.

In addition the Company has initiated an internal review of the Trintes infill drilling programme and the Trintes-TGAL and Galeota Ridge development plan. 

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

"Following the successful completion of the restructuring, the Company is now focusing on curtailing natural decline of existing production and adding new production through increased well work via recompletions and the drilling of new onshore development wells. We are also re-focusing effort on our offshore East Coast asset at Galeota where attractive in field opportunities exist and where large upside can be realised through the Trintes-TGAL and wider Galeota Ridge development."

Competent Person's Statement

The information contained in this announcement has been reviewed and approved by Graham Stuart, the Company's Technical Advisor who has 34 years of relevant global experience in the oil industry.  Mr Stuart holds a BSC (Hons) in Geology. Reserve are based on internal management estimates in accordance with SPE PRMS guidelines (Petroleum Resources Management System 2007 & Revisions).

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:

Trinity Exploration & Production Bruce Dingwall, Executive Chairman Tracy Mackenzie, Head of Corporate Development	Tel: [phone]
SPARK Advisory Partners Limited (Nominated & Financial Adviser) Mark Brady Miriam Greenwood Sean Wyndham-Quin	Tel: [phone]
Cantor Fitzgerald Europe (Broker) David Porter Sebastien Maurin Craig Francis	Tel: [phone]

About Trinity

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 2016 was 21.3 MMbbls (excluding the Guapo-1 license which was disposed of in April 2016). 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.

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