Trinidad and Tobago Budget Highlights

RNS Number : 9654A

Trinity Exploration & Production

28 September 2022

 

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended.  On publication of this announcement via a Regulatory Information Service, this information is considered to be in the public domain.

28 September 2022

Trinity Exploration & Production plc

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

Trinidad and Tobago Budget Highlights

Trinity Exploration & Production plc (AIM: TRIN), the independent E&P company focused on Trinidad and Tobago , welcomes the Government of Trinidad and Tobago (the "GORTT's") stated intention to stimulate higher levels of activity and investment in the energy sector as set out in the 2023 Budget Statement delivered on Monday 26 September 2022 (the "Statement").

The Statement ( https://www.finance.gov.tt/wp-content/uploads/2022/09/Budget-Statement-2023-1.pdf ) included three proposals relevant to Trinity:

1.  Incentives for small onshore oil producers

2.  Lower rates of Supplemental Petroleum Tax ("SPT") for new oil wells in shallow marine areas

3.  An increase in Investment Tax Credit

These elements will directly benefit Trinity's existing onshore producing assets and, potentially, materially improve the economics of the Company's East Coast and West Coast shallow marine licences. 

Key Points:

1.  Incentives for Small Onshore Producers

The production threshold for small onshore oil producers to benefit from the previously increased SPT threshold price of USD 75 per barrel will be increased from 2,000 barrels per day to 4,000 barrels per day.

The USD 75 per barrel threshold was due to expire at the end of 2022 but has been extended indefinitely. 

The SPT rates applicable to small onshore producers are as follows:

Oil Price (USD)	Rate of SPT
$0.00   to   $75.00	0%
$75.01   to   $90.00	18%
$90.01   to   $200.00	SPT Rate = 18% + 0.2% (P - USD90.00)
$201.01 and over	55%

Note: P = weighted average crude oil price in USD.

2.  Lower Rates of SPT for New Oil Wells In Shallow Marine Areas

New oil wells in shallow water marine areas (the definition of which covers Trinity's East Coast and West Coast assets), whether in existing fields or new fields, will benefit from lower SPT rates.  

Current SPT - Shallow Marine			Amended SPT - Shallow Marine
Oil Price (USD)	Rate of SPT		Oil Price (USD)	Rate of SPT
$0.00   to   $50.00	0%		$0.00   to   $50.00	0%
$50.01 to   $90.00	33%		$50.01   to   $70.00	15%
			$70.01   to   $90.00	20%
$90.01 to   $200.00	33% + 0.2% (P - USD 90.00)		$90.01   to   $200.00	20% + 0.2% (P - USD 90.00)
$200.01 and over	55%		$200.01 and over	42%

Note: P = weighted average crude oil price in USD.

The precise methodology for determining what is defined as "new oil wells" will be finalised following discussion with the oil companies.

3.  Increase in Investment Tax Credit

Energy companies are currently eligible to claim a tax credit of 25% of qualifying capital expenditure as a deduction against SPT .  The GORTT has proposed an increase in the Investment Tax Credit from 25% to 30%.  This will benefit Trinity's onshore and offshore assets.

All of the proposed amendments will take effect from 1 January 2023.

Jeremy Bridglalsingh, Chief Executive Officer, commented:   "The Government's focus on stimulating the energy sector, and specifically oil production, is to be welcomed and will provide opportunities for Trinity.  The SPT changes for onshore production will positively impact our cashflow, thereby increasing our capacity to reinvest.  Given our large hopper of drill-ready prospects, these measures should enable us to undertake a multi-year drilling programme to significantly expand our onshore production.  We are also encouraged by the proposals for reduced SPT for new shallow marine wells which could directly benefit our East Coast and West Coast licences and we are committed to work with the Government to mature the methodology for these changes.  Whilst we believe this is a positive development, and as such is to be welcomed, Trinity will continue to champion tax reform to make investment in Trinidad competitive in an international context as we continue to build our business in the coming years."

Enquiries

Trinity Exploration & Production Nick Clayton, Non-Executive Chairman Jeremy Bridglalsingh, Chief Executive Officer Julian Kennedy, Corporate Development Manager	Via Vigo Consulting
SPARK Advisory Partners Limited (Nominated Adviser & Financial Adviser) Mark Brady James Keeshan	[phone]
Cenkos Securities PLC (Broker) Leif Powis (Corporate Broking) Neil McDonald	[phone] [phone]
Vigo Consulting Limited Finlay Thomson/Patrick d' Ancona	t rinity @vigoconsulting.com [phone]

About Trinity ( www.trinityexploration.com )

Trinity is an independent oil 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 ten licences and, across all of the Group's assets, management's estimate of the Group's 2P reserves as at the end of 2021 was 19.73 mmbbls. Group 2C contingent resources are estimated to be 47.22 mmbbls. The Group's overall 2P plus 2C volumes are therefore 66.95 mmbbls.

Trinity is quoted on AIM, a market operated and regulated by the London Stock Exchange Plc, under the ticker TRIN.

Disclaimer

This document contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil exploration and production business. Whilst the Group believes the expectation reflected herein to be reasonable in light of the information available to it at this time, the actual outcome may be materially different owing to macroeconomic factors either beyond the Group's control or otherwise within the Group's control.

 

END

 

 

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