TIDMTRIN
RNS Number : 8036V
Trinity Exploration & Production
19 April 2021
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Trinity Exploration & Production plc
("Trinity" or "the Group" or "the Company")
Q1 2021 Operational Update
Strong Production and Cash Generation
Good Progress on New Projects
Trinity Exploration & Production plc (AIM: TRIN), the
independent E&P company focused on Trinidad and Tobago, today
provides an update on its operations for the three-month period
ended 31 March 2021 ("Q1 2021" or "the period").
Q1 2021 Summary
Production levels were resilient over the period with volumes
averaging 3,107 bopd (Q4 2020: 3,202 bopd) . This is a result of
Trinity's pro-active approach to protecting base production, and
places Trinity as a clear leader in the region.
As a result of the continued strong operating performance, the
Group's unaudited cash balances remained robust at US$20.0 million
as at 31 March 2021 (US$20.2 million (unaudited) as at 31 December
2020) despite increased investment in growth initiatives occurring
in Q1 2021.
The Company's priority over the quarter, from an operational
standpoint, has been to progress the automation and digitalisation
of our core production business. The development of our proprietary
Trinity Operations Management System (or "TOMS"), which measures
and collates our critical production data, is key to enabling the
Company to further improve our core production, operational
efficiency and profitability metrics and will greatly enhance our
ability to expand the business through leveraging that competitive
advantage. In parallel to the push on automation, our expanded
subsurface team has now begun to interpret the 3D seismic data set
covering our onshore acreage, the first time that data
interpretation has taken place in such detail in any of these lease
areas. The team's preliminary review has already provided a new
perspective of the basin, revealing additional potential and
deepening our understanding of the petroleum system. We are already
seeing an expanded opportunity set which can be matured for
drilling within our onshore operations, and believe the potential
benefits could be transformational for Trinity.
Looking to the future, we continue to work in the Jubilee data
room on the offshore West Coast opportunity and we have recently
learnt that we have also been short listed for the North West
District ("NWD") onshore exploration bid round from Heritage, the
state oil company. We are continuing to jointly evaluate both of
these opportunities alongside Cairn Energy plc.
Our Echo platform development off the east coast (formerly TGAL)
also progresses, with the Field Development Plan ("FDP") nearing
completion for submission to the Ministry of Energy and Energy
Industries in the coming weeks. Work has recently started on the
onshore tank farm engineering upgrades and the pipeline shore
crossing engineering, both using international contractors.
In addition, we continue to actively pursue microLNG and
renewables projects with the NGC (National Gas Company of Trinidad
& Tobago) to contribute towards energy transition in Trinidad
and, potentially, in the wider Caribbean and Latin America.
Bruce Dingwall, CBE, Executive Chairman of Trinity, commented:
"In addition to our strong core production operations, where our
performance has bucked the trend, we have a number of exciting
opportunities to develop and radically enhance our portfolio. We
are strongly positioned to grow on a number of fronts over the next
6-12 months, from initiatives both within the current business and
from new projects that could be brought into the portfolio. We
remain highly focused on scaling our business and generating
increased returns."
Q1 2021 Operational Highlights
-- 7 % year-on-year reduction in Group average production
volumes to 3,107 bopd (Q1 2020: 3,347 bopd), representing a modest
3 % quarter-on-quarter drop (Q4 2020: 3,202 bopd).(1)
-- No new drilling took place in Q1 2021 but 1 recompletion
("RCPs") (Q4 2020: 4) and 22 workovers (Q4 2020: 31) were completed
during the period, with swabbing continuing across the Onshore and
West Coast assets.
-- Continued deployment of Supervisory, Control and Data
Acquisition ("SCADA") platforms with acceleration of roll-out to be
implemented in Q2 2021 following the arrival of 23 additional units
in March 2021.
-- Production volumes for the remainder of 2021 will depend on
oil price and general market conditions supporting the economic and
technical (based on onshore seismic interpretation) case for the
resumption of new drilling activity.
-- Net average production for 2021 is expected to be 2,900 -
3,100 bopd (before the potential drilling of new wells and/or
acquisitions) (2020: 3,226 bopd).
Q1 2021 Financial Highlights
-- Average realisation of US$ 52.3/bbl for Q1 (Q1 2020:
US$46.3/bbl). As a result, whilst no Supplemental Petroleum Taxes
("SPT") will be payable with respect to onshore production, SPT of
c.US$0.7 million will be payable in Q2 with respect to offshore
production.
-- Cash balance of US$20.0 million (unaudited) as at 31 March
2021. Q1 2021 cash balances reflect cash outflows relating to the
onshore seismic acquisition at the end of 2020, capex of c.US$1.2
million and annual payments (such as insurance) which arise in Q1
of the financial year.
-- Focus on cost controls helped offset the impact of lower
production levels resulting in an average operating break-even of
US$25.8/bbl (unaudited) for the period compared to US$24.9/bbl for
Q1 2020.
-- Hedging income totalled US$ 0.2 million in Q1 2021.
o The Company took advantage of the increase in oil prices to
purchase two new instruments during Q1 offering downside protection
for 10,000 bbls/month for H1 2021 and 15,000/month for H2 2021.
o Additional hedging instruments will be put in place as
appropriate.
-- With the focus on investing for growth, the Company is now
targeting an average operating break-even (inclusive of hedging
income) of c.US$ 26.0 /bbl for FY 2021.
Extension of Lease Operatorship Agreements
Trinity has further extended the term of its Lease Operatorship
Agreements ("LOAs") with Heritage for its WD-2, WD-5/6, WD-13 and
WD-14 blocks to 30 April 2021. If completion has not taken place by
30 April 2021 a further temporary extension would be expected. The
LOAs were originally set to expire on 31 December 2020 and were
previously extended to 31 March 2021. The LOAs remain under
existing terms and conditions while Heritage progresses on
regulatory approvals regarding new 10 year LOAs for each
property.
Outlook
Finalising the 10 year LOA licence extensions, integrating the
recently acquired 3D data, the improved oil price outlook and the
recently implemented SPT reform (with the onshore SPT trigger now
US$75/bbl) give the Company confidence that it will be able to
recommence drilling during H2 with a view to further driving value
and building on production forecasts for the period.
Having proven its low cost, low risk production model during the
past 12 months - and with the Company now benefitting from the
recovery in the oil price - the focus is on scaling the business.
Increased automation across producing assets combined with a
growing opportunity to significantly enhance production in
collaboration with key industry partners will be core to Trinity's
development for the remainder of the year.
Notes:
(1) Reporting Quarterly production volumes, for all periods
referenced, versus production sales volumes previously as more
representative of actual reservoir/operational performance.
Results
The Company will announce full year results for the year ended
31 December 2020 in May 2021.
Enquiries
For further information please visit www.trinityexploration.com
or contact:
Trinity Exploration & Production plc +44 (0)131 240 3860
Bruce Dingwall CBE, Executive Chairman
Jeremy Bridglalsingh, Managing Director
Tracy Mackenzie, Corporate Development
Manager
SPARK Advisory Partners Limited (Nominated
Adviser and Financial Adviser) +44 (0)20 3368 3550
Mark Brady
James Keeshan
Cenkos Securities PLC (Broker)
Neil McDonald +44 (0)20 7397 8900
Derrick Lee +44 (0)131 220 6939
Walbrook PR Limited +44 (0)20 7933 8780
Nick Rome/Nicholas Johnson trinityexploration@walbrookpr.com
About Trinity ( www.trinityexploration.com )
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 2019 was 20.9 mmbbls.
Group 2C contingent resources are estimated to be 20.1 mmbbls. The
Group's overall 2P plus 2C volumes are therefore 41.1 mmbbls.
Trinity is quoted on the AIM market of the London Stock Exchange
under the ticker TRIN.
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