TIDMTRIN
RNS Number : 6199B
Trinity Exploration & Production
24 September 2018
Dissemination of a Regulatory Announcement that contains inside
information according to
REGULATION (EU) No 596/2014 (MAR).
Trinity Exploration & Production plc
("Trinity" or "the Company" or "the Group")
Interim Results
Profitable growth and debt free
Trinity, the independent E&P company focused on Trinidad
& Tobago ("T&T"), announces its unaudited interim results
for the six month period ended 30th June 2018 ("H1 2018" or "the
period").
This was a transformative period for the Company, including the
recommencement of drilling activity and continued production growth
delivering an uplift in cash generation. In addition, the post
period-end saw the Company raise gross proceeds of USD 20.0 million
("the Fundraising") which has significantly strengthened the
balance sheet, leaving it debt free and with the cash resources
available to continue to profitably grow production and
returns.
H1 2018 Highlights
H1 2018 H1 2017 % Change
Average realised oil price (USD/ bbl)(1) 60.0 46.3 30
Average net production (bopd) 2,771 2,397 16
Revenues (USD million) 30.1 20.2 49
Adjusted EBITDA (USD million)(2) 9.3 5.9 58
Adjusted EBITDA (USD/bbl)(2) 18.6 13.6 37
Group operating break-even (USD/bbl)(3) 28.5 28.2 1
Operating cash flow (USD million) 5.0 1.7 194
Capital expenditure (USD million) 4.4 0.7 529
Cash balance (USD million) 9.1 11.5 (21)
Pro Forma net cash / (debt) (USD million)(4) 19.0 (1.2) N/A
Notes:
1. Realised price: Actual price received for crude oil sales per barrel ("bbl")
2. Adjusted EBITDA: See Note 18 for the calculation of Adjusted
EBITDA. Per bbl figures refer to production over the period.
3. Group operating break-even: The realised price/bbl for which
the Adjusted EBITDA/bbl for the Group is equal to zero. See
Appendix 1 - Trading Summary Table
4. Pro Forma net cash/ (debt): See Post Funding Pro Forma Balance Sheet Extract
H1 2018 Highlights
Operational
-- H1 2018 average production of 2,771 bopd (H1 2017: 2,397
bopd), representing a 16% increase over the corresponding period
last year, underpinned by:
- Drilling of 2 new onshore wells. Both drilled efficiently and
cost effectively on a turnkey basis.
- 7 recompletions ("RCPs") (H1 2017: 5).
- Base production maintenance through a continuous campaign of
62 workovers ("WO") and reactivations (H1 2017: 44).
Financial
-- Balance sheet significantly strengthened from a net debt
position (USD 1.2 million) at 30th June 2017 to a pro-forma net
cash position of USD 19.0 million at 30th June 2018 (adjusted for
the post period end Fundraise and debt repayments).
-- Adjusted EBITDA increased 58% to USD 9.3 million (H1 2017:
USD 5.9 million) and Adjusted EBITDA/bbl improved to USD 18.6/bbl
(H1 2017: USD 13.6/bbl), with the increased oil price and
production growth leveraging off a relatively fixed operating cost
base.
-- Maintained a group operating break-even price below USD 30.0/bbl (H1 2018: USD 28.5/bbl).
-- Operating cash flow increased to USD 5.0 million (H1 2017: USD 1.7 million).
-- Capital expenditure for the period amounted to USD 4.4
million (H1 2017: USD 0.7 million), comprising mainly of new wells,
RCPs and continued infrastructure investment.
-- Accelerated the repayment of outstanding debt to the Board of
Inland Revenue ("BIR") and Ministry of Energy and Energy Industries
("MEEI") (together, "the T&T State Creditors") with total
payment over the period of USD 3.3 million. All remaining amounts
were repaid in July 2018.
Post Period End Highlights
Corporate
o Funded and Debt Free
-- In July 2018 the Company raised gross proceeds of USD 20.0 million through the Fundraising:
- USD 6.4 million of the Fundraising comprised non-cash rollover
by holders of 88% of the Convertible Loan Notes ("CLNs") electing
to convert the value of their CLNs into new ordinary shares at the
issue price.
- The Company has subsequently repaid, in full, the outstanding
debt of USD 2.6 million to the T&T State Creditors as well as
the remaining USD 0.9 million of CLNs which were outstanding.
- The Fundraising will enable the Company to accelerate its
onshore drilling programme and production, with a planned 8-10
wells per year. The free cash flow which the Company expects to
generate will enable it to self-fund new onshore drilling activity
from 2020 onward while continuing double-digit annual production
growth as it develops its low risk onshore assets.
o East Coast Asset Development
-- The Company has continued to revise the Trintes drilling plan
and rework the TGAL Field Development Plan ("FDP"), which offers a
significant opportunity to deliver a step-change in production
levels in the medium term.
-- The Petroleum Company of Trinidad and Tobago ("Petrotrin") Restructuring Update
-- On 28th August 2018 Petrotrin announced its intention to
discontinue refining operations to focus on its upstream
exploration and production activities. The Company does not expect
this decision to impact the ongoing Sales Agreements with Petrotrin
for Trinity's crude oil production, which it anticipates will be
consolidated with Petrotrin and others' output and exported as it
has been on previous occasions when the refinery had been shut
down.
Operational Look Ahead
o Recommencement of drilling activity
-- Signed a turnkey agreement with external drilling contractor
for a 6 well onshore campaign, bringing the total for 2018 to at
least 8 wells. The first well was spudded in August 2018.
-- The production impact of this drilling programme will be
realised towards the end of Q4 2018 into Q1 2019.
o Routine production activity
-- H2 2018 work programme will continue with; RCPs, routine WOs, reactivations and swabbing.
-- An offshore RCP will be undertaken in the Trintes field,
which will be the first offshore RCP that Trinity will be doing
since assuming operatorship in 2013.
Bruce A. I. Dingwall CBE, Executive Chairman of Trinity,
commented:
"With a return to new infill drilling in H1 2018 alongside a
continuing programme of RCPs, WOs, swabbing and reactivation
activities, Trinity was able to reset its base production at a
higher level. In H2 2018, post the fundraise and the settlement of
all outstanding debt, we have established a stable, well-funded
platform with significant reserves and resources and an established
growth trajectory which is ideally positioned to continue growing
production, cash flow and shareholder value. With peer leading
break-evens and plans to increase production we can grow
profitability in the short-term whilst working up a further
step-change from future developments.
"The acceleration of our onshore drilling programme has allowed
Trinity to position itself to deliver double digit production
growth year-on-year, generate significant cash flow and will
facilitate self-funded new onshore drilling activity from 2020
onwards whilst selectively pursuing other value accretive
opportunities.
"On behalf of the Board I must thank all our staff and our key
suppliers in Trinidad for their hard work and support which has
allowed Trinity to focus on profitable growth whilst maintaining a
safe working environment. 2018 has been pivotal to Trinity thus far
and the Board would additionally like to take this opportunity to
thank existing shareholders and other stakeholders for their
support and welcome new shareholders as we move forward debt free
and strongly positioned to take advantage of future opportunities
in the changing environment in Trinidad & Tobago"
The Interim Results report is available for download on the
Group's website www.trinityexploration.com.
Enquiries
Trinity Exploration & Production
Bruce Dingwall, Executive Chairman
Jeremy Bridglalsingh, Chief Financial
Officer
Tracy Mackenzie, Corporate Development
Manager +44 (0)131 240 3860
SPARK Advisory Partners Limited (NOMAD
& Financial Adviser)
Mark Brady
Miriam Greenwood
Andrew Emmott +44 (0)20 3368 3550
Cenkos Securities PLC (Broker)
Joe Nally (Corporate Broking)
Neil McDonald
Beth McKiernan
Derrick Lee +44 (0)20 7397 8900
Pete Lynch +44 (0)131 220 6939
Whitman Howard Limited (Equity Adviser)
Nick Lovering
Hugh Rich +44 (0)20 7659 1234
Walbrook PR Limited trinityexploration@walbrookpr.com
Nick Rome +44 (0)20 7933 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 36 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 9
licences and, across all of the Group's assets, management's
estimate of 2P reserves as at the end of 2017 was 23.2 mmbbls.
Group 2C contingent resources are estimated to be 24.0 mmbbls. The
Group's overall 2P plus 2C volumes are therefore 47.2 mmbbls.
Trinity is listed on the AIM market of the London Stock Exchange
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.
OPERATIONAL REVIEW
During H1 2018, the Company continued to build on the momentum
achieved in 2017 through the continuation of the RCP programme and
drilling of 2 onshore wells, thereby delivering 16% year-on-year
production growth. The H2 2018 activity set of low cost, high
return activities will include; RCPs, WOs, reactivations and
swabbing activities and the addition of a 6-well onshore drilling
programme.
Onshore operations
-- H1 2018 average net production was 1,530 bopd (H1 2017: 1,278
bopd). The 20% increase was as a result of the 2 Infill wells
drilled and continued performance from the ongoing RCP (7) and base
maintenance WOs and reactivations (45) (H1 2017: 5 RCPs, 34 WOs and
4 reactivations).
-- H2 2018 planned work programme anticipates:
- 6 infill wells which will allow a rebasing of production
levels
- Continued RCPs and ongoing base management via; WOs,
reactivations and swabbing across all fields.
East Coast operations
-- H1 2018 average production was 1,046 bopd (H1 2017: 909
bopd). The 15% increase in production was due to a WO and
reactivation campaign which commenced in 2017 and continued with 13
WOs during H1 2018 (H1 2017 5).
-- H2 2018 work programme will include the first RCP offshore
since the restructuring in addition to the programme of routine WOs
and reactivations.
-- Trinity continues to invest in maintaining production levels
via better generator maintenance strategies, continued pump
optimisation and review of alternative artificial lift technologies
to augment production rates.
West Coast operations
-- H1 2018 average net production was 195 bopd (H1 2017: 210
bopd). The 7% decrease in production was largely the result of
natural production decline.
-- H2 2018 planned work programme will include WOs on key wells
to maintain production levels along with the continuation of asset
integrity related projects.
FINANCIAL REVIEW
Income Statement Analysis
H1 2018 H1 2017 Change
Production
Average realised oil price (USD/ bbl) 60.0 46.3 13.7
Average net production (bopd) 2,771 2,397 374
Statement of Comprehensive Income USD'000 USD'000 USD'000
Operating revenues 30,098 20,180 9,918
Operating expenses (excluding DD&A) (22,741) (14,695) (8,046)
------------------------------------------- -------------- ---------------------- ---------------------
Operating profit before DD&A 7,357 5,485 1,872
DD&A (4,746) (3,551) (1,195)
------------------------------------------- -------------- ---------------------- ---------------------
Operating profit before exceptional items 2,611 1,934 677
Exceptional items 11,616 25,123 (13,521)
------------------------------------------- -------------- ---------------------- ---------------------
Operating profit after exceptional items 14,227 27,057 (12,844)
Supplemental petroleum taxes (3,650) - (3,650)
Other taxes 884 - 884
------------------------------------------- -------------- ---------------------- ---------------------
Operating profit/(loss) after exceptional
items, SPT and other taxes 11,461 27,057 (15,610)
Finance cost (1,279) (1,177) (102)
------------------------------------------- -------------- ---------------------- ---------------------
Profit before income tax 10,182 25,880 (15,712)
Taxation credit/ (charge) 5,726 (2,452) 8,178
------------------------------------------- -------------- ---------------------- ---------------------
Profit after income tax 15,908 23,428 (7,534)
Currency translation (19) 352 (371)
------------------------------------------- -------------- ---------------------- ---------------------
Total comprehensive income 15,889 23,780 (7,905)
Operating Revenues
Operating revenues of USD 30.1 million (H1 2017: USD 20.2
million). The USD 9.9 million increase was as a result of an
increase in average realised crude prices and increased
production.
Operating Expenses
Operating expenses of USD (27.5) million (H1 2017: USD (18.2)
million) comprised of the following:
-- Royalties of USD (10.0) million (H1 2017: USD (5.9) million)
-- Production costs ("OPEX") of USD (8.3) million (H1 2017: USD (6.7) million)
-- DD&A charges of USD (4.7) million (H1 2017: USD (3.6) million)
-- G&A expenditure of USD (2.9) million (H1 2017: USD (1.6)
million), including USD (0.3) million non-cash share option
expenses (H1 2017: nil)
-- Other expenses of USD (1.6) million (H1 2017: 0.4) relate to
fair value adjustment on the oil price derivative. During H1 2018
the Group paid USD 0.6 million in relation to the oil price
derivative, with the fair value adjustment also allowing for the
ongoing exposure for the remainder of 2018.
Operating Profit before Exceptional Items
The operating profit (before exceptional items) for the period
amounted to USD 2.6 million (H1 2016: USD 1.9 million) and was
mainly driven by an increase in crude oil prices and increased
production.
Exceptional items
Exceptional items of USD 11.6 million (H1 2017: USD 25.1
million) relate to a revaluation of the embedded call option
associated with the CLNs, which is a non cash gain. The embedded
call option associated with the CLN was revalued as at 30th June
2018 which resulted in a fair value gain arising on the financial
instrument. This gain was eliminated when the CLNs were converted
or repaid subsequent to the period end, and as such will not occur
in the 2018 full year results.
Supplementary Petroleum Tax ("SPT") and Property Tax
The Group incurred SPT of USD 3.7 million in H1 2018 (H1 2017:
nil), on account of the realised oil price exceeding USD 50.0/bbl
throughout the six month period. The 2016 and 2017 property taxes
which had been accrued in the 2017 financial results were reversed
in H1 2018 following the assent to the Property Tax Amendment Act
2018 by the Government of Trinidad and Tobago on 8th June 2018,
resulting in a USD 0.9 million reduction in the accrual for other
taxes in the period.
Net Finance Cost
Finance costs for the period totalled USD (1.3) million (H1
2017: USD (1.2) million), made up of:
-- Unwinding of the discount rate on the decommissioning
provision of USD (0.8) million (H1 2017: USD (0.8) million)
-- Accrued interest on CLN USD (0.4) million (H1 2017: USD (0.3) million)
-- Interest on loan - nil (H1 2017: USD (0.1) million)
-- Interest unwind on the liabilities at fair value USD (0.1)
million (H1 2017: USD (0.0) million)
Taxation
Taxation credit for the period was USD 5.7 million (H1 2017: USD
(2.5) million charge) which is mainly made up of:
-- Recognition of deferred tax assets of USD 5.8 million (H1
2017: de-recognition USD (2.8) million)
-- Decrease in deferred tax liability of USD (0.0) million (H1 2017: USD 0.4 million)
-- Unemployment Levy of USD (0.1) million (H1 2017: USD (0.1) million)
As at 30th June 2018, the Group had unrecognised tax losses of
USD 213.0 million which have no expiry date.
Total Comprehensive Income
Total Comprehensive Income for the period was USD 15.9 million
(H1 2017: 23.8 million)
Cash Flow Analysis
Opening Cash Balance
Trinity began the year with an initial cash balance of USD 11.8
million (2017: USD 7.6 million).
Summary of Statement of Cash Flows
H1 2018 H1 2017 FY 2017
USD'000 USD'000 USD'000
Opening cash balance 11,792 7,615 7,615
--------------------------------------------------- -------- -------- ---------
Cash movement
Net cash inflow from operating activities 4,996 1,704 9,554
Net cash outflow from Unsecured and T&T State
Creditor payments (3,254) (7,162) (12,632)
Net cash outflow from investing activities (4,403) (650) (3,118)
Net cash inflow from financing activities - 10,025 10,373
--------------------------------------------------- -------- -------- ---------
(Decrease)/ increase in cash and cash equivalents (2,661) 3,917 4,177
Closing cash balance 9,131 11,532 11,792
=================================================== ======== ======== =========
Net cash inflow from operating activities
Cash inflow from operating activities was USD 5.0 million (H1
2017: USD 1.7 million). H1 2018 included:
-- Operating activities resulting in an adjusted profit before
tax of USD 5.7 million (H1 2017: USD 4.2 million)
-- Changes in working capital comprising of a net decrease of
USD (0.7) million (H1 2017: USD (2.5) million) excluding changes in
working capital relating to the Restructuring of USD (3.3) million
(H1 2017: USD (7.2) million)
-- Taxation paid USD (0.1) million (H1 2017: nil)
Cash out ow; change in working capital relating to the
Restructuring
Working capital cash out ows relating to the Restructuring
amounted to USD (3.3) million (H1 2017: USD (7.2) million)
comprising:
-- USD (3.3) million (H1 2017: USD (3.3) million) in quarterly payments to T&T State Creditors
-- No payments to Unsecured Creditors were incurred in H1 2018 (H1 2017: USD (3.9) million)
Cash outflow from investing activities
Trinity incurred capital expenditures mainly on production
related capex on its onshore assets and infrastructure capex on its
East Coast assets totaling USD (4.4) million in aggregate (H1 2017:
USD (0.7) million)
Net cash inflow from financing activities
No financing activities occurred in H1 2018 (H1 2017: USD 10.0
million)
Closing Cash Balance
Trinity's cash balance at 30th June 2018 was USD 9.1 million (H1
2017: USD 11.5 million)
Post Funding Pro Forma Balance Sheet Extract
Incorporating the post period end net proceeds from the
Fundraising and subsequent debt repayments the like-for-like pro
forma would be a net cash position of USD 19.0 million (2017: USD
1.2 million net debt position) based on Management's view. The
turnaround from the net debt position on a year-on-year basis to a
net cash position was a result of the July 2018 USD 20.0 million
Fundraising and settlement of all remaining debts owed to T&T
State Creditors and CLN holders which strengthened the Group's
Statement of Financial Position as follows:
i. Increase in cash and cash equivalents from USD 9.1 million to
USD 18.0 million. This took into consideration the following cash
movements post the period end:
-- USD 13.6 million cash proceeds from issue of new ordinary shares
-- USD (2.6) million repayment to T&T State Creditors
-- USD (1.2) million cost of raising equity
-- USD (0.9) million paid to CLN holders
ii. Expunged the Derivative Financial Asset of USD 11.6 million.
Following redemption of the CLN the early call option was
extinguished and so the Derivative Financial Asset has been
expunged from the Pro Forma Balance Sheet.
iii. CLN redemption and repayment - USD 6.4 million of the
principal and interest were converted into new ordinary shares
(this USD 6.4 million is the non-cash component of the USD 20.0
million Fundraising). The remaining USD 0.9 million of CLNs were
redeemed via a cash payment in August 2018.
iv. Full and final repayment to T&T State Creditors of USD
2.6 million which occurred in July 2018.
Balance Sheet Extract H1 2018 H1 2018 H1 2017 FY 2017
Unaudited Unaudited Unaudited Unaudited
All amounts in USD million Pro forma(1) Mgmt. View(2) Mgmt. View(2) Mgmt. View(2)
---------------------------------------- ----- ------------- -------------- -------------- --------------
A: Current assets
Cash and cash equivalents i 18.0 9.1 11.5 11.8
Trade and other receivables 6.3 6.3 3.7 5.2
Inventories 3.9 3.9 3.7 3.8
Derivative financial asset ii - 11.6 0.2 -
Total current assets 28.2 30.9 19.1 20.8
============= ============== ============== ==============
B: Liabilities
Non-current liabilities
Trade and other payables - - 1.8 1.0
Taxation payable - - 3.6 -
Convertible loan note iii - 7.3 6.8 7.0
Total non-current liabilities(3) - 7.3 12.2 8.0
Current liabilities
Trade and other payables iv 7.3 9.9 4.3 10.2
Taxation payable 0.2 0.2 3.8 1.7
Derivative financial instrument 1.7 1.7 - 0.8
Total current liabilities(4) 9.2 11.8 8.1 12.7
Total liabilities 9.2 19.1 20.3 20.7
============= ============== ============== ==============
(A-B): Net cash/(debt)
position 19.0 11.8 (1.2) 0.1
Notes:
1. Shows half year pro forma balance sheet position post Fundraise and debt repayment
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
APPIX 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 2018 H1 2017 % Change
Realised price (USD/bbl) 60.0 46.3 30
Production (bopd)
Onshore 1,530 1,278 20
West Coast 195 210 (7)
East Coast 1,046 909 15
-------------------------------- -------- -------- ---------
Group 2,771 2,397 16
Operating break-even (USD/bbl)
Onshore 15.7 16.1 (3)
West Coast 24.4 29.0 (16)
East Coast 27.8 23.2 20
Group 28.5 28.2 1
Metrics (USD/bbl)
Opex/bbl - Onshore 11.4 10.8 6
Opex/bbl - West Coast 20.3 24.0 (15)
Opex/bbl - East Coast 21.5 17.6 22
G&A/bbl 5.0 3.8 32
STATEMENT OF DIRECTORS' RESPONSIBILITY
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with
International Accounting Standards ("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 2018
(Expressed in United States Dollars)
------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30th to 30th December
June 2018 June 2017 2017
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Revenues
Crude oil sales 30,085 20,120 44,957
Other income 13 60 210
------------ ------------ ------------
30,098 20,180 45,167
Operating Expenses
Royalties (10,013) (5,906) (13,755)
Production costs (8,259) (6,759) (14,737)
Depreciation, depletion and
amortisation 8 (4,746) (3,551) (7,055)
General and administrative expenses (2,883) (1,630) (4,326)
Other operating expenses 2 (1,586) (400) (1,362)
------------ ------------ ------------
(27,487) (18,246) (41,235)
------------ ------------ ------------
Operating Profit before Supplemental
Petroleum Taxes and Other Taxes 2,611 1,934 3,932
Supplemental petroleum taxes (3,650) -- (1,533)
Other taxes 5 884 -- (497)
------------ ------------ ------------
Operating (Loss)/Profit Before
Exceptional Items (155) 1,934 1,902
Exceptional items 4 11,616 25,123 25,718
Finance cost 7 (1,279) (1,177) (2,300)
------------ ------------
Profit Before Taxation 10,182 25,880 25,320
Taxation credit/(charge) 6 5,726 (2,452) 28
------------ ------------ ------------
Profit for the period 15,908 23,428 25,348
Other Comprehensive (Expense)/Income
Currency translation (19) 352 76
------------ ------------ ------------
Total Comprehensive Income for
the Period 15,889 23,780 25,424
============ ============ ============
Earnings per share (expressed
in dollars per share)
Basic 19 0.06 0.09 0.09
Diluted 19 0.04 0.07 0.06
Trinity Exploration & Production plc
Condensed Consolidated Statement of Financial Position
for the period ended 30th June 2018
(Expressed in United States Dollars)
---------------------------------------------------------------------------------------------
Notes As at 30th As at 30th As at 31st
June 2018 June 2017 December
2017
ASSETS $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current Assets
Property, plant and equipment 8 52,552 48,202 52,450
Intangible assets 9 25,708 25,362 25,591
Abandonment fund 2,185 1,135 1,650
Performance bond 253 253 253
Deferred tax asset 13 9,948 2,665 4,179
------------ ------------ -----------
90,646 77,617 84,123
------------ ------------ -----------
Current Assets
Inventories 3,940 3,730 3,766
Trade and other receivables 10 6,254 3,658 5,155
Derivative financial assets 11 11,616 200 --
Cash and cash equivalents 9,131 11,532 11,792
------------ ------------ -----------
30,941 19,120 20,713
Assets held-for-sale -- 7,696 --
------------ ------------ -----------
30,941 26,816 20,713
------------ ------------ -----------
Total Assets 121,587 104,433 104,836
============ ============ ===========
Equity
Capital and Reserves Attributable
to Equity Holders
Share capital 12 96,676 96,676 96,676
Share premium 12 125,362 125,362 125,362
Share warrants -- 71 --
Other equity 14 590 590 590
Share based payment reserve 12,922 12,247 12,553
Reverse acquisition reserve (89,268) (89,268) (89,268)
Merger reserves 75,467 75,467 75,467
Translation reserve (1,532) (1,645) (1,678)
Accumulated deficit (155,204) (172,429) (171,112)
------------ ------------ -----------
Total Equity 65,013 47,071 48,590
Non-current Liabilities
Trade and other payables 16 -- 2,544 881
Taxation payable 6 -- 2,730 --
Convertible loan note 14 3,378 2,729 3,019
Deferred tax liability 13 2,508 2,503 2,538
Provision for other liabilities 15 38,772 26,348 37,151
------------ ------------ -----------
44,658 36,854 43,589
------------ ------------ -----------
Current Liabilities
Trade and other payables 16 9,862 7,918 10,092
Taxation payable 6 198 86 1,688
Derivative financial liabilities 17 1,703 -- 762
Provision for other liabilities 15 153 106 115
------------ ------------ -----------
11,916 8,110 12,657
Liabilities held-for-sale -- 12,398 --
------------ ------------
11,916 20,508 12,657
------------ ------------ -----------
Total Liabilities 56,574 57,362 56,246
------------ ------------ -----------
Total Shareholders' Equity and Liabilities 121,587 104,433 104,836
============ ============ ===========
Trinity Exploration & Production plc
Condensed Consolidated Statement of Changes in Equity
for the period ended 30th June 2018
(Expressed in United States Dollars)
------------------------------------------------------------------------------------------------------------------------------------
Share Share Share Other Share Reverse Merger Translation Accumulated Total
Capital Premium Warrant Equity Based Acquisition Reserve Reserve Deficit
Payment Reserve
Reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- ---------- -------- ------- --------- ------------ --------- ------------ ------------ ---------
Balance at 1st
January 2017 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
========= ========== ======== ======= ========= ============ ========= ============ ============ =========
Balance at 1st
January 2018 96,676 125,362 -- 590 12,553 (89,268) 75,467 (1,678) (171,112) 48,590
Share based
payment
charge -- -- -- -- 369 -- -- -- -- 369
Translation
difference -- -- -- -- -- -- -- 146 -- 146
Total
comprehensive
income
for the
period -- -- -- -- -- -- -- -- 15,908 15,908
Balance at
30th June
2018
(unaudited) 96,676 125,362 -- 590 12,922 (89,268) 75,467 (1,532) (155,204) 65,013
========= ========== ======== ======= ========= ============ ========= ============ ============ =========
Trinity Exploration & Production plc
Condensed Consolidated Cashflow Statement
for the period ended 30th June 2018
(Expressed in United States Dollars)
----------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30th to 30th 31st December
June 2018 June 2017 2017
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Activities
Profit before taxation 10,182 25,880 25,320
Adjustments for:
Translation difference (675) (735) (663)
Finance Income 31 -- --
Finance cost 7 359 348 579
Share option expense 368 3 235
Finance cost - decommissioning provision 7 778 829 1,643
Depreciation, depletion and amortisation 8 4,746 3,551 7,055
Loss on disposal of assets 8 (6) -- --
Impairment of property, plant and
equipment 8 -- 732 --
Impairment of inventory -- -- 264
Impairment of receivables -- 348 348
Gain on extinguishment of financial
liabilities -- (210) (210)
Gain recognised on embedded derivative (11,616) -- --
Fair value zero cost collar 17 1,586 -- 762
Compromised creditor balances (18) (26,568) (26,672)
5,735 4,178 8,661
------------ ------------- ---------------
Changes In Working Capital
(Increase)/Decrease in Inventory (163) 57 (243)
(Increase)/Decrease in Trade and other
receivables (843) 451 (887)
Increase/(Decrease) in Trade and other
payables 395 (2,982) 2,023
------------ ------------- ---------------
5,124 1,704 9,554
------------ ------------- ---------------
Taxation paid (128) -- --
------------ ------------- ---------------
Net Cash Inflow From Operating Activities 4,996 1,704 9,554
------------ ------------- ---------------
Restructuring related payments
Unsecured creditors -- (3,850) (3,857)
T&T State creditors (3,254) (3,312) (8,775)
------------ ------------- ---------------
(3,254) (7,162) (12,632)
------------ ------------- ---------------
Investing Activities
Purchase of computer software -- -- (250)
Evaluation and exploration assets 9 (46) -- --
Purchase of property, plant & equipment 8 (4,357) (650) (2,868)
Net Cash Outflow From Investing Activities (4,403) (650) (3,118)
------------ ------------- ---------------
Financing Activities
Finance cost -- (348) --
Issue of shares (net of costs) -- 10,843 10,843
Issue of convertible notes (net of
costs) -- 3,030 3,030
Repayments of borrowings -- (3,500) (3,500)
------------ ------------- ---------------
Net Cash Inflow From Financing Activities -- 10,025 10,373
------------ ------------- ---------------
(Decrease)/Increase in Cash and Cash
Equivalents (2,661) 3,917 4,177
============ ============= ===============
Cash And Cash Equivalents
At beginning of period 11,792 7,615 7,615
(Decrease)/Increase (2,661) 3,917 4,177
------------ ------------- ---------------
At end of period 9,131 11,532 11,792
============ ============= ===============
Trinity Exploration & Production plc
Notes to the Condensed Consolidated Financial Statements for the
period ended 30th June 2018
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 2018 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 2017, 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 2018, and as at
30th June 2017 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 2017 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 Board of Directors
have considered the Group's budget and cash flow forecasts taken
together with the announcement on 25th June 2018, whereby the Group
announced its intention to raise $20.0 million to accelerate growth
and fully repay all outstanding debt to the T&T State Creditors
and the CLNs.
Subsequent to the period end, the Fundraising completed and the
proceeds were used to repay in full the outstanding debt to the
Board of Inland Revenue of Trinidad and Tobago ("BIR") and the
Ministry of Energy and Energy Industries of Trinidad & Tobago
("MEEI"), as well as all outstanding amounts under the CLNs. The
proceeds will also enable the Group to rapidly accelerate its
onshore drilling programme and production, with a planned 8-10
wells per year and to allow revision of the Trintes drilling plan
and the TGAL Field Development Plan with the Company's East Coast
Assets offering a significant opportunity to deliver a step-change
in production levels in the medium term.
Following completion of the fundraising in July, the Group
repaid the remaining outstanding debt to the BIR and the MEEI
amounting to $2.6 million in aggregate. In addition on 15th August
2018, payment was made to settle the remaining debt to holders of
the CLNs, amounting to $0.9 million. The holders of CLNs with a
value (including accrued interest) of approximately $6.4 million
had agreed to convert the value of their CLNs into new ordinary
shares pursuant to the Subscription. The Group has thereby
completed the full repayment of all outstanding debt and has
sufficient capital resources to progress its accelerated drilling
programme. 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 and 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 2017, 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 2018 that would be
expected to have a material impact on the Group. The Company has
adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9
Financial Instruments effective 1st January 2018. Adoption of these
standards has not materially affected the way the Group accounts
for its revenues or financial instruments. However, the Company
will be including the new disclosures required by IFRS 15 from the
2018 year end onwards.
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 2017.
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 CLNs
that can 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. Under the terms of the CLNs each holder could
after the second anniversary of the issue date serve a Conversion
Notice whereby the principal amount plus the outstanding interest
could be converted into new fully paid ordinary shares at a
Conversion Price of $0.08125. However, the Company had the option
to redeem the CLNs in certain circumstances within two years of
their issue ("the Two Year Call Option") as described in note
14.
Trinity engaged a specialist valuation team to value the
derivative relating to the CLN. The embedded derivative was
described as the difference between:
- The actual bond issued
- A hypothetical bond without the Group having the option to call the bond early.
The main driver of the valuation compares the redemption value
of the bond to the projected conversion value in January 2019. The
calculation anticipates that without the early call option Trinity
would call the bond on the earliest date, which would in turn
trigger investors to convert the bond at this date.
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 at 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.
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.
In June 2018 a third party was engaged to conduct a valuation of
the derivative financial instruments held namely the embedded
derivative relating to the Two Year Call Option within the CLN and
the Zero cost collar oil derivative. The valuation methodology used
were as follows:
Embedded derivative: In order to estimate the value of the Two
Year Call Option at the valuation date, the settlement price of the
Note (cash and equity settlement combined) was compared with the
value of the CLN with the original terms (i.e. if the two year
restriction until January 2019 existed for the whole Note). In
estimating the value of the CLNs, an income approach framework and
a binomial lattice model was utilised. This model is an
implementation by MATLAB of the Tsiveriotis and Fernandes
convertible bond model.
Zero cost collar: The oil derivative was modelled as a
combination of a Call leg and a Put leg. The Put leg was based on a
long position on a strip of oil put options while the Call leg was
a short position on a strip of oil call options, all expiring on
each month end until the termination date of the instrument. Market
data included futures prices and implied volatilities from
Bloomberg and interest rates from S&P Capital IQ. The two legs
of Asian options utilised a modified Black-76 formula with Turnbull
and Wakeman approximation (1991).
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 Group's overall risk management
program seeks to minimise potential adverse effects on the Group's
financial performance
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 2017, which can be
found at www.trinityexploration.com.
Zero Collar oil derivative:
On 6th November 2017 a Zero Cost Collar was entered into
effective 1st January 2018. The derivative is a combination of a
long position on a strip of oil put options and a short position on
a strip of oil call options (from Management's perspective). The
key terms are summarized below:
-- Trade Date - 6th November 2017
-- Effective Date - 1st January 2018
-- Notional quantity - 25,000 US barrels per month
-- Option Type and Style - Monthly Asian Put (Arithmetic average
of all settlement prices in a month)
-- Strike Price per unit - $45 per US barrel for the put options
and $59.8 per US barrel for the call options
-- Commodity-OIL WTI
-- Exercise Dates - End of each month until 31st December
2018
The introduction of the collar is one of management's tool used
to mitigate risks. There is no other change in the risk management
department or in any risk management policies 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:
- Zero cost collar put in place - Effective January 2018 the
zero cost collar oil derivative was effective. The strike price per
unit was $45.0 per US barrel for the put options and $59.8 per US
barrel for the call options.
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 30th June 2018.
Level 1 Level 2 Level 3 Total
------------------- --------- -------- -------- ------
$'000 $'000 $'000 $'000
Liabilities
Zero cost collar -- 1,703 -- 1,703
Total liabilities -- 1,703 -- 1,703
=================== ========= ======== ======== ======
Fair value measurements using observable inputs (Level 2)
For measuring the zero cost collar at fair value through the
profit or loss, an assessment of oil price movement and volatility
at 30th June 2018 was performed valuing the instrument at $1.7
million which was determined as follows:
Zero cost
collar
$'000
1st January 2018 (762)
Payments 645
Losses recognised (1,586)
30th June 2018 (1,703)
==========
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. The Group has engaged an external valuation specialist in
conducting the valuations on the embedded derivative and zero cost
collar.
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 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
Impairment of property, plant & -- 732 --
equipment - FZ 2
Secured creditor compromise -- (6,450) (6,472)
Interest on tax compromise -- (5,249) (5,247)
Unsecured creditors' compromise -- (15,532) (15,639)
Foreign exchange loss on compromised
balance -- 663 687
Impairment of receivable -- 348 234
Impairment on inventory -- -- 264
Restructuring -- 577 532
Gain on extinguishment of financial
liabilities -- (210) (210)
Gain on fair value of financial 11,616 -- --
instrument
Impairment on recompletions -- -- 135
Translation difference -- (2) (2)
11,616 (25,123) (25,718)
========== ========== ==============
Exceptional items during the current year:
Fair Value Gain on the valuation of the early call option
associated with the CLN - ($11.6 million): In June 2018 a valuation
of the embedded Two Year Call Option associated with the CLN was
completed. The valuation resulted in a gain of $11.6 million for
the Two Year Call Option as at the valuation date of 30th June
2018. See additional details in note 11.
5 Other Taxes
30th June 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
Property tax charges (216) -- (497)
Property tax reversal 2016 and 1,100 -- --
2017
884 -- (497)
========== ========== ==============
The Property Tax Amendment Act 2018 was assented to on 8th June
2018 by the Government of Trinidad and Tobago. The Act effectively
waived the obligation to pay Property Tax ("PT") up to December
2017. PT accrued for the years 2016 and 2017 of $1.1 million, has
been reversed at the end of June 2018.
6 Taxation Charge/ (Credit)
a. Taxation Charge 30th June 30th June 31st December
2018 2017 2017
Current tax $'000 $'000 $'000
* Current period
Petroleum Profits Tax -- 44 (926)
Corporation Tax ("CT") -- -- --
Unemployment Levy (62) -- (26)
Deferred tax
* Current period
Movement in asset due to tax losses 5,750 2,822 1,317
Movement in liability due to accelerated
tax depreciation 5 (392) (389)
Unwinding deferred tax on fair value
uplift 33 (27) --
Translation differences -- 5 (4)
Tax charge/(credit) 5,726 2,452 (28)
========== ========== ==============
The Group has a deferred tax asset of $9.9 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 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
b. Taxation payable current
Petroleum Profits Tax ("PPT")/Unemployment
Levy ("UL") -- 86 66
Due to BIR (PPT,CT and UL) 198 -- 1,622
Taxation payable 198 86 1,688
========== ========== ==============
c. Taxation payable non-current
Petroleum Profits Tax/ Unemployment -- 2,222 --
Levy
Corporation Tax -- 508 --
Taxation payable -- 2,730 --
========== ========== ==============
The Taxation payable has been split between current and
non-current and represents the principal balance owed to the
BIR.
7 Finance Cost
30th June 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
Decommissioning 778 829 1,643
Interest accrued on Citibank loan -- 84 44
Interest unwind on liabilities 142 16 34
Interest on Convertible loan note 359 248 579
1,279 1,177 2,300
========== ========== ==============
8 Property, Plant and Equipment
Plant Land Oil &
& Equipment & Buildings Gas Property Other Total
$'000 $'000 $'000 $'000 $'000
------------- ------------- -------------- ------ ----------
Opening net book amount at 1st
January 2018 3,767 1,726 46,957 -- 52,450
Additions 205 2 4,434 -- 4,641
Disposal -- (6) -- -- (6)
Reclassification of assets between
categories (2,470) -- 2,470 --
Depreciation, depletion and amortisation
charge for period (784) (70) (3,892) -- (4,746)
Transferred to disposal group
held for sale
Translation difference -- (1) 214 -- 213
Closing net book amount 30th June
2018 718 1,651 50,183 -- 52,552
============= ============= ============== ====== ==========
Period ended 30th June 2018
Cost 10,643 3,111 279,353 336 293,443
Accumulated depreciation, depletion,
amortisation and impairment (9,925) (1,459) (229,384) (336) (241,104)
Translation difference (1) 214 213
------------- ------------- -------------- ------ ----------
Closing net book amount 30th June
2018 718 1,651 50,183 -- 52,552
============= ============= ============== ====== ==========
Plant Land Oil &
& Equipment & Buildings Gas Property Other Total
$'000 $'000 $'000 $'000 $'000
------------- ------------- -------------- ----------- -----------
Opening net book amount at 1st
January 2017 4,201 1,890 53,541 -- 59,632
Additions 27 1 622 -- 650
Disposal -- (9) -- -- (9)
Impairment -- -- (732) -- (732)
Depreciation, depletion and amortisation
charge for period (305) (76) (3,170) -- (3,551)
Transferred to disposal group
held for sale (187) (108) (7,401) -- (7,696)
Translation difference (7) (1) (84) -- (92)
Closing net book amount 30th June
2017 3,729 1,697 42,776 -- 48,202
============= ============= ============== =========== ===========
Period ended 30th June 2017
Cost 12,884 3,125 273,230 336 289,575
Accumulated depreciation, depletion,
amortisation and impairment (9,148) (1,427) (230,370) (336) (241,281)
Translation difference (7) (1) (84) -- (92)
------------- ------------- -------------- ----------- -----------
Closing net book amount 30th June
2017 3,729 1,697 42,776 -- 48,202
============= ============= ============== =========== ===========
Plant & Land & Oil &
Equipment Buildings Gas Assets Other Total
$'000 $'000 $'000 $'000 $'000
----------- ----------- ------------ ------ ----------
Year ended 31st December 2017
Opening net book amount at 1st
January 2017 4,201 1,890 53,541 -- 59,632
Additions 42 2 2,824 -- 2,868
Disposal -- (9) -- -- (9)
Adjustment to decommissioning
estimate -- -- (2,868) -- (2,868)
Depreciation, depletion and amortisation
charge for year (483) (147) (6,425) -- (7,055)
Translation difference 7 (10) (115) -- (118)
----------- ----------- ------------ ------ ----------
Closing net book amount 31st December
2017 3,767 1,726 46,957 -- 52,450
=========== =========== ============ ====== ==========
At 31st December 2017
Cost 12,901 3,126 272,565 336 288,928
Accumulated depreciation, depletion,
amortisation and impairment (9,141) (1,390) (225,493) (336) (236,360)
Translation difference 7 (10) (115) -- (118)
----------- ----------- ------------ ------ ----------
Closing net book amount 3,767 1,726 46,957 -- 52,450
=========== =========== ============ ====== ==========
9 Intangible Assets
Computer Software Exploration Total
and evaluation
assets
$'000 $'000 $'000
At 1st January 2018 250 25,341 25,591
Additions -- 46 46
Translation difference -- 71 71
At 30th June 2018 250 25,458 25,708
------------------ ---------------- -------
At 1st January 2017 -- 25,406 25,406
Translation difference -- (44) (44)
At 30th June 2017 -- 25,362 25,362
------------------ ---------------- -------
At 1st January 2017 -- 25,406 25,406
Computer software 250 -- 250
Translation difference -- (65) (65)
At 31st December 2017 250 25,341 25,591
================== ================ =======
Computer Software: New accounting software purchased in
2017.
Exploration and evaluation assets: Costs related to the TGAL
exploration well and field development plan.
10 Trade and Other Receivables
30th June 30th June 31st December
2018 2017 2017
Due within one year $'000 $'000 $'000
Trade receivables 3,264 1,967 3,272
Prepayments 1,217 1,001 631
VAT recoverable 1,372 506 807
Other receivables 401 184 445
6,254 3,658 5,155
========== ========== ==============
The fair value of trade and other receivables approximate their
carrying amounts.
11 Derivative financial assets
30th June 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
Assets Assets Assets
Put Option-commodity price hedge -- 200 --
Embedded derivative (Two Year 11,616 -- --
Call Option)
11,616 200 --
========== ========== ==============
A valuation of the embedded derivative associated with the Two
Year Call option within the CLN was undertaken as at 30th June
2018. The embedded derivative was fair valued and the gain
attributed to:
-- The high probability of the Company exercising the Two Year Call option
-- Reduction in the Company's estimated cost of borrowing
-- Increase in market price of the Company's shares over the CLN's exercise price
Following the redemption of the CLN post 30th June 2018, the
gain on the Two Year Call option will be extinguished.
In 2017 a put option was implemented effective 1st April 2017
which hedged a portion of the Group's monthly production against
downside movements in crude oil price below $40.0/barrel until 31st
March 2018.
Share capital
Number of Ordinary Share premium Total
shares shares $'000
$'000 $'000
As at 1st January 2018 282,399,986 96,676 125,362 222,038
As at 30th June 2018 282,399,986 96,676 125,362 222,038
============ ========= ============== ========
12 Deferred Income Taxation
The analysis of deferred tax assets is as follows:
30th June 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
Deferred tax assets:
-Deferred tax assets to be recovered
in more than 12 months (9,948) (2,665) (4,179)
Deferred tax liabilities:
-Deferred tax liabilities to be
settled in more than 12 months 2,508 2,503 2,538
Net deferred tax (assets)/liability (7,440) (162) (1,641)
========== ========== ==============
The movement on the deferred income tax is as follows:
30th June 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
---------- ---------- --------------
At beginning of year (1,641) (2,569) (2,569)
Movement for the year (5,799) 2,407 928
Translation difference -- -- --
Net deferred tax (asset)/liability (7,440) (162) (1,641)
========== ========== ==============
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 analyzed
below:
Movement Movement Movement 30th
1st January 30th June 31st December June
2017 2017 2017 2018
$'000 $'000 $'000 $'000 $'000 $'000 $'000
------------ --------- ----------- ---------- -------------- ---------- -----------
Deferred tax
assets
Acquisition (33,436) -- (33,436) -- (33,436) -- (33,436)
Tax losses
recognised (34,293) -- (34,293) -- (34,293) (5,760) (40,053)
Tax losses
derecognised 62,233 2,831 65,064 (1,514) 63,550 (9) 63,541
------------ --------- ----------- ---------- -------------- ---------- -----------
(5,496) 2,831 (2,665) (1,514) (4,179) (5,769) (9,948)
============ ========= =========== ========== ============== ========== ===========
Deferred tax Movement Movement Movement 30th
liabilities 1st January 30th June 31st December June
2017 2017 2017 2018
Accelerated
tax depreciation 14,374 (395) 13,979 64 14,043 -- 14,043
Non-current
asset impairment (33,214) (33,214) -- (33,214) -- (33,214)
Acquisitions 19,580 -- 19,580 -- 19,580 19,580
Fair value
uplift 2,187 (29) 2,158 (29) 2,129 (30) 2,099
------------ --------- ----------- ---------- -------------- ---------- -----------
2,927 (424) 2,503 35 2,538 (30) 2,508
============ ========= =========== ========== ============== ========== ===========
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 $5.8 million have been recognised (2017: $1.3 million
was derecognised) as recoverability is now considered probable.
Deferred tax liabilities have reduced by $0.03 million (2017: $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 tax losses amounting to $213.0 million which have no
expiry date (2017: $218.5 million).
13 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. 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 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:
Total
$'000
6 months ended 30th June 2018
Opening amount as at 1st January
2018 3,019
Nominal value of CLN issued --
Interest accrued(2) 359
------------
Closing balance as at 30th June
2018 3,378
============
6 months ended 30th June 2017
Opening amount as at 1st January
2017 --
Nominal value of CLN issued(1) 6,550
Issued at a 50% discount (3,275)
------------
Fair value of CLN 3,275
Expenses incurred (245)
------------
Fair value of CLN (net of costs) 3,030
Equity component (590)
------------
Liability component at initial
recognition 2,440
Interest accrued(2) 289
------------
Closing balance at 30th June 2017 2,729
============
Year ended 31st December 2017
Opening amount as at 1st January --
2017
Nominal value of CLN issued(1) 6,550
Issued at a 50% discount (3,275)
----------
Fair value of CLN 3,275
Expenses incurred (245)
----------
Fair value of CLN (net of costs) 3,030
Equity component (590)
----------
Liability component at initial
recognition 2,440
Effective interest 105
Interest accrued(2) 474
----------
Closing balance at 31st December
2017 3,019
==========
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.
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 re-measured. See note 21 for post period update on the
CLN.
14 Provisions and Other Liabilities
Non-Current: Employee Total
Decommissioning Retirement
cost Benefit
$'000 $'000 $'000
6 months ended 30th June 2018
Opening amount as at 1st January
2018 37,151 -- 37,151
Unwinding of discount 778 -- 778
Decommissioning provision 739 -- 739
Translation differences 104 -- 104
---------------- ------------ ---------
Closing balance as at 30th
June 2018 38,772 -- 38,772
================ ============ =========
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 (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
================ ============ =========
Year ended 31st December 2017
Opening amount as at 1st January
2017 37,970 348 38,318
Restructuring provision settled -- (348) (348)
Unwinding of discount 1,643 -- 1,643
Revision to estimates (2,868) -- (2,868)
Decommissioning provision 497 -- 497
Translation differences (91) -- (91)
---------------- ------------ ---------
Closing balance at 31st December
2017 37,151 -- 37,151
================ ============ =========
Current: Litigation
claims Other Provisions Total
$'000 $'000 $'000
6 months ended 30th June 2018
Opening amount as at 1st January
2018 115 -- 115
Provision for litigation claims 6 -- 6
Litigation claims settled (38) -- (38)
Provision for drill pit closure -- 70 70
Closing balance as at 30th June
2018 83 70 153
=========== =================== ========
6 months ended 30th June 2017
Opening amount as at 1st January
2017 470 -- 470
Litigation claims compromised (364) -- (364)
Closing balance as at 30th June
2017 106 -- 106
=========== =================== ========
Year ended 31st December 2017
Opening amount as at 1st January
2017 470 -- 470
Litigation claims compromised (355) -- (355)
Closing balance at 31st December
2017 115 -- 115
=========== =================== ========
15 Trade and Other Payables
30th June 30th June 31st December
2018 2017 2017
$'000 $'000 $'000
Non-current:
Due to BIR Interest on taxes -- 970 417
Due to MEEI -- 670 231
Other Payables -- 904 233
---------- ---------- --------------
-- 2,544 881
========== ========== ==============
Current:
Trade payables 1,085 419 555
Accruals 3,009 1,503 2,547
VAT payable 170 129 272
Other payables 783 903 701
Supplemental Petroleum Tax and
Property Tax 2,436 3,708 2,626
Due to BIR Interest on taxes 1,749 775 2,865
Due to MEEI 630 481 526
9,862 7,918 10,092
========== ========== ==============
16 Derivative financial Liabilities
Derivatives are classified as held for trading and accounted for
at fair value through profit or loss unless they are designated as
hedges. They are presented as current assets or liabilities if they
are expected to be settled within 12 months after the end of the
reporting period. (See note 2)
Zero Cost Collar Total
$'000
6 months ended 30th June 2018
Opening balance 762
Loss on Fair value of derivative
instrument 1,586
Payment (645)
------
Closing balance as at 30th June
2018 1,703
======
17 Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure used by the Group to
measure business performance. It is calculated as Operating Profit
before Supplemental Petroleum Taxes and Other Taxes for the period,
adjusted for depreciation, depletion and amortisation, share option
expenses and other expenses (including the impact of derivative
hedge instruments).
The Group presents adjusted EBITDA as it is used in assessing
the Group's growth and operational efficiencies as it illustrates
the underlying performance of the Group's business by excluding
items not considered by management to reflect the underlying
performance of the Group.
Adjusted EBITDA is calculated as follows:
6 months 6 months Year ended
to 30th June to 30th June December
2018 2017 2017
$'000 $'000 $'000
-------------- -------------- -----------
Operating Profit Before Supplemental
Petroleum Taxes and Other Taxes 2,611 1,934 3,932
Depreciation, depletion and amortisation 4,746 3,551 7,055
Share option expenses 368 3 239
Loss on oil derivative hedge instruments 1,586 400 1,362
Adjusted EBITDA 9,311 5,888 12,588
$'000 $'000 $'000
-------------- -------------- -----------
Weighted average ordinary shares outstanding
- basic 282,400 270,936 276,746
Weighted average ordinary shares outstanding
- diluted 400,708 363,828 395,054
$ $ $
Adjusted EBITDA per share - basic 0.03 0.02 0.05
Adjusted EBITDA per share - diluted 0.02 0.02 0.03
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 - Weighted Average Earnings
Total Comprehensive Number Of Shares Per Share
Income/(Loss) '000 $
For The Period
$'000
Period ended 30th June
2018
Basic 15,889 282,400 0.06
Diluted 15,889 400,708 0.04
Period ended 30th June
2017
Basic 23,780 270,936 0.09
Diluted 23,780 363,828 0.07
Year ended 31st December
2017
Basic 25,424 276,746 0.09
Diluted 25,424 395,054 0.06
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: CLNs and
share options. The CLNs 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 to the second anniversary of
$1.0 million divided by the conversion price of $0.08125. Long term
incentives of 25,415,998 are also considered potential ordinary
shares and have been included in the determination of the diluted
earnings per share. Share options of 1,975,084 are considered
potential ordinary shares but have not been included 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.
-- 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
i) On 12th July 2018 the Company completed the Fundraising,
raising gross proceeds of $20.0 million through the following:
-- Firm Placing to existing and new institutional investors
which raised approximately $11.1 million;
-- Subscription which raised approximately $6.9 million,
comprising:
- $ 0.5 million of subscriptions by Trinity Directors and
Executive Management; and
- $ 6.4 million in relation to the holders of CLNs who opted to
convert the value of their CLNs inclusive of accrued interest at
the Issue Price; and
-- Offer to Qualifying Participants which raised approximately
$2.0 million.
The Fundraising allowed the Group to repay all outstanding debt
to its T&T State Creditors which amounted to $2.6 million in
aggregate. Following this final repayment, on 15th August 2018
Trinity settled the remaining outstanding debt to holders of the
CLNs who did not elect to convert their CLNs pursuant to the
Subscription which amounted to $0.9 million.
ii) On 28th August 2018 Petrotrin announced it is to discontinue
refining operations and undergo a companywide restructuring in
order to focus on its upstream exploration and production
activities. The Company expects that this decision will have no
impact on the ongoing Sales Agreements with Petrotrin for Trinity's
crude oil production and that the crude oil will be consolidated
and exported as it has been previously.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DFLFLVKFFBBQ
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