TIDMTRIN
RNS Number : 9359Z
Trinity Exploration & Production
20 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
in the public domain.
20 September 2022
Trinity Exploration & Production plc
("Trinity" or "the Company" or "the Group")
Interim Results
Strong operating and financial resilience continue to underpin
the Group's pursuit of multiple initiatives to meaningfully scale
the business
Trinity Exploration & Production plc (AIM: TRIN) , the
independent E&P company focused on Trinidad and Tobago
("T&T"), announces its unaudited interim results for the
six-month period ended 30 June 2022 ("H1 2022" or "the
period").
Jeremy Bridglalsingh, Chief Executive Officer of Trinity,
commented:
"The first six months of 2022 was a period of consolidation for
Trinity, positioning the Company strongly for the second half of
the year and beyond. Stable production and higher oil prices
boosted our revenues in the period, the benefit of this will be
fully felt when our hedges expire at the end of 2022. Towards the
end of the first half the Company commenced a potentially
transformational drilling programme onshore Trinidad. The six-well
programme is ongoing, with drilling of the most notable wells, a
horizontal well and a deeper appraisal well, due to start in the
coming months. I believe this has the potential to meaningfully
increase our scale, and as such prove to be the start of one of the
most exciting periods in the Company's history. I am also pleased
to announce the Company's intention to implement a new Capital
Allocation Policy which is likely to include the payment of a
regular dividend and a share buy-back programme to further deliver
value to our shareholders."
2022 Year to Date Strategic Highlights
H1 2022 saw production levels broadly maintained and the Company
benefit from stronger operational cash flows due to higher realised
oil prices, with the impact of these partially offset by the effect
of hedging instruments . The Company's oil price hedge payment
exposure reduces and unwinds in H2 2022 and there are no hedging
instruments in place currently for 2023. In addition to continuing
its programme of recompletions and workovers which kept production
stable, the Company commenced its fully funded onshore drilling
operations. The first two wells successfully encountered target
reservoir sections as prognosed, confirming our pre -drill
expectations, and are currently on production test. The Company is
preparing to move onto the third well of the planned six well
campaign.
Onshore
Onshore continues to be a robust set of assets with a break-even
price of USD 18.5/bbl (H1 2021: USD 17.9/bbl) even after observing
inflationary increases from the supply chain. Successful analysis
and interpretation of the 3D Seismic across all our onshore Blocks,
including PS-4 which was acquired in December 2021, has de-risked
our drilling campaign that commenced in June 2022.
East Coast
The Company has continued to refine its plans for Galeota via a
staged development initially exploiting the 9.77 mmbbls of 2P
reserves in the Trintes field. This approach reduces risk and capex
and offers a shorter timeframe to achieve production.
Galeota's 40.39 mmbbls 2C resources offer the potential for
future phase of development or optimisation of the development. The
Company is hopeful that the Government of Trinidad and Tobago will
conclude its deliberations and provide further details on reforms
to Supplemental Petroleum Tax (" SPT ") in the near term and this
will facilitate potential coventurers to fully assess the economics
of the opportunity when the Galeota farm down process
recommences.
Corporate
The Board wishes to advise shareholders of its intention to
announce a new Capital Allocation Policy during H1 2023, once the
outcome of the six well drilling campaign has been assessed. This
is likely to include:
-- Payment of a regular dividend that will help inform future
capital allocation decisions whilst not impeding the Company's
growth potential; and
-- A buy-back programme that will flex depending on commodity prices.
Further details on Trinity's Capital Allocation Policy will be
provided in conjunction with the preliminary results for 2022. In
the interim, the Board is also considering a modest share buyback
programme, and expects to provide further guidance in due
course.
H1 2022 Key Performance Indicators
Trinity prepares the interim financial statements in compliance
with International Financial Reporting Standards (" IFRS ") .
Management considers additional Alternative Performance Measures ("
APMs ") to give further insight into the performance of the Group.
Management believes that analysis of both performance measures
delivers improved guidance to Management for operational and
strategic decision-making purposes. The Group was profitable in H1
2022 under an APM basis but not IFRS. This is mainly due to the
unrealised fair value hedge expense recognised at 30 June 2022,
which is expected to significantly decrease in H2 2022 due to the
reduction in oil prices. Higher oil price realisations and
relatively stable net sales volumes, resulted in a 58% increase in
Revenues to USD 48.5 million (H1 2021: USD 30.7 million) and a 28%
increase in Adjusted EBITDA (Note 19 in the financial statements)
to USD 12.8 million (H1 2021: USD 10.0 million). The period-end
cash balance was USD 15.0 million (H1 2021: USD 19.0 million) due
to increased hedging payments and taxes in H1 2022, resulting from
higher oil prices, and increased capital expenditure. A summary of
the period-on-period operational and financial highlights are set
out below:
H1 2022 H1 2021 Change
%
Average realised oil price(1) USD/bbl 90.1 55.9 61
Average net sales(2) bopd 2,974 3,032 (2)
Revenues USD million 48.5 30.7 58
Cash balance USD million 15.0 19.0 (21)
IFRS Results
Operating Profit before SPT &
PT USD million 5.4 2.9 84
Total Comprehensive (Loss)/Income USD million (0.7) 1.6 (145)
Earnings per share - diluted USD cents (0.9) 3.8 (125)
APM Results ( APM measures exclude non-cash items)
Adjusted EBITDA(3) USD million 12.8 10.0 28
Adjusted EBITDA(4) USD/bbl 23.7 18.2 30
Adjusted EBITDA margin(5) % 26.3 32.6 (19)
Adjusted EBITDA after Current
Taxes(6) USD million 4.8 6.8 (29)
Adj. EBITDA after Current Taxes
per share - diluted US cents 11.4 16.1 (29)
Consolidated operating break-even USD/bbl 32.4 27.8 17
Net cash plus working capital
surplus(8) USD million 18.6 22.3 (17)
Notes:
1. Realised price: Actual price received for crude oil sales per barrel ("bbl").
2. Average net sales: This refers to average sales attributable
to Trinity per day for all operations; lease operatorships,
farm-out operations and joint ventures.
3. Adjusted EBITDA: Operating Profit before Taxes for the
period, adjusted for Depreciation, Depletion & Amortisation
("DD&A") and other non-cash expenses, namely Share Option
Expenses, Impairment of Financial Assets, FX Gains/Losses and Fair
Value Gains/Losses on Derivative financial instruments. Adjusted
EBITDA for 2021 updated to include Covid-19 expense
4. Adjusted EBITDA (USD/bbl): Adjusted EBITDA/sales volume over the period.
5. Adjusted EBITDA Margin (%): Adjusted EBITDA/Revenues.
6. Adjusted EBITDA after Current Taxes: Adjusted EBITDA less
Supplemental Petroleum Taxes ("SPT"), Property Taxes ("PT"),
Petroleum Profits Tax ("PPT") and Unemployment Levy ("UL").
7. Group operating break-even: The realised price/bbl where the
Adjusted EBITDA/bbl for the Group is equal to zero.
8. Net cash plus working capital surplus: Current Assets less
Current Liabilities (other than Derivative financial asset /
liability and Provision for other liabilities).
H1 2022 Strategic Highlights
-- The onshore drilling campaign commenced on 29 June 2022. This
fully-funded programme, which includes four conventional infill
wells, a horizontal well and a deeper appraisal well, is targeting
an aggregate of up to 1,100mbbls of reserves at a cost of USD 14
million to USD 17 million. These are significantly higher volumes
per dollar of capital invested, and, in a success case, are
expected to generate materially increased cash returns compared
with previous drilling programmes.
-- Having commenced drilling, the near-term focus is on
completing the 2022 drilling programme safely, on time and on
budget, and bringing these wells onto production in short order. It
is expected that the four conventional, low angle, wells will be
brought on to production before this year end, collectively
contributing to an increase of 200-250 bopd. Production is
anticipated to continue to increase into Q1 2023 subject to
successful outcomes for the horizontal well and deeper well, the
combination of which is projected to underpin a material increase
in operating cash flow for 2023. The Company has no hedging
instruments in place for 2023.
H1 2022 Financial Highlights
-- Average realisation of USD 90.1/bbl for H1 2022 (H1 2021: USD 55.9/bbl).
-- Revenues up 58% to USD 48.5 million (H1 2021: USD 30.7 million).
-- Cash operating costs of USD 17.6/bbl (H1 2021: USD 15.2/bbl)
reflecting the newly acquired PS-4 asset. Higher number of
workovers and reactivations conducted in H1 2022 vs H1 2021 ( 61
workovers and reactivations in H1 2022 vs 43 conducted in H1 2021),
higher vessel costs and fuel costs due to increased rates, and
certain one-off initial maintenance operating costs on the PS-4
asset.
-- General and administrative costs of USD 6.6/bbl (H1 2021: USD
5.3/bbl) due to increase in levies arising on higher oil prices,
increased software maintenance costs related to supporting the
technical teams and additional technical staff related costs.
-- Cash balance of USD 15.0 million as at 30 June 2022 (YE 2021:
USD 18.3 million) reflecting a combination of strong operating cash
generation being impacted by increased hedge payments and taxes on
the account of higher oil prices, and increased capex, including
the purchase of long lead items to support the drilling
campaign.
-- Average operating break-even for H1 2022 was USD32.4/bbl
(unaudited) (H1 2021: USD 27.8/bbl) .
H1 2022 Operational Highlights
-- Safely commenced the fully funded six well drilling campaign within the WD-5/6 onshore block:
o Currently progressing to the third of four low angle wells,
which will be followed by one horizontal and one deep appraisal
well.
o The drilling campaign is expected to lead to a meaningful
increase in production by the end of H1 2023, when all six wells,
in a success case, are expected to be onstream.
-- H1 2022 average net sales volumes of 2,974 bopd represents a
modest 2% decrease compared to the corresponding period last year
(H1 2021: 3,032 bopd). Base production contributed 2,907 bopd and
the new added asset, PS-4 contributed 67 bopd.
-- Eleven (11) recompletions ("RCPs") (H1 2021: 3) and 61
workovers and reactivations ("WOs") (H1 2021: 43) were completed
during the period, with swabbing continuing across the onshore and
west coast assets.
o 6 additional RCPs are being worked up for execution in H2
2022, of which 50% are already approved by the relevant regulatory
bodies.
-- Production volumes have benefited from the Company's focus on
well performance and optimisation.
o T he Company's largest onshore field, WD-5/6, now has 85% of
production under automation. The automation of these wells has been
carefully implemented over the past year and the early results are
very positive. 28 of the 31 wells have demonstrated extended run
life and we are seeing results initially in reduced personnel and
equipment time in H1 2022. The Company is currently quantifying the
additional benefits such as reduced physical monitoring, reduction
in carbon footprint and HSE exposure.
-- Galeota Field Development Plan ("FDP")
o The farm down process commenced in December 2021. Trinity
received the final Certificate of Environmental Clearance ("CEC")
for the Echo Field Development in Q1 2021 which is a critical step
in advance of moving towards the Final Investment Decision (" FID
"). However, whilst initial feedback from the farm down process was
encouraging, a number of participants informed us that they were
unable to fully assess the economics of this opportunity without
clarity on the expected fiscal reforms (particularly relating to
SPT). Hence, pending SPT reform, the Company paused the Galeota
farm down process and advanced a development option focusing
initially on achieving production from the field's 2P reserves.
-- The onshore 3D seismic interpretation has unlocked several
very encouraging, potentially meaningful new oil plays; a hopper of
stratigraphically deeper ('deeper test') prospects, leads and
infill opportunities. Thus far three prospects have been matured,
one of which we intend to drill in the 2022 drilling campaign.
-- Net average production guidance for 2022 remains 2,900-3,100
bopd (before the impact of the drilling campaign and/or
acquisitions), with production anticipated to continue to increase
into Q1 2023.
Post Period End Highlights
Outlook
The first two wells in the Palo Seco area have been drilled with
no Lost Time Injuries (" LTI 's") over the period, a positive
result for the drilling team and lead contractors. Both wells
encountered target reservoir sections as prognosed with a combined
net pay (both primary and secondary targets) of 690 feet,
confirming our pre-drill subsurface models and expectations. Both
wells are on production test currently and will be optimised for
stabilised production in the coming weeks. The next well in the
campaign will be a conventional well in Forest Reserve area with a
planned spud date before the end of September 2022.
Having completed two wells and with drilling imminent on the
third well, the near-term focus is on completing the 2022 campaign
safely, on time and on budget, and bringing these wells onto
production in short order. It is expected that the four
conventional low angle wells will be producing before this year
end, with each contributing to a meaningful increase in the daily
production rate. Production is expected to continue to increase
into Q1 2023, subject to successful outcomes from drilling the
horizontal and deeper wells, the combination of which is projected
to underpin a material increase in operating cash flow for 2023,
for which no hedging instruments are in place.
The interim results as at 30 June 2022 includes the impact of
accounting for a Mark to Market (" MTM ") derivative hedge
liability for H2 2022 of USD 6.1 million, as well as the cash cost
incurred during H1 2022 of USD 6.0 million. We currently expect
that hedge costs in H2 will be materially lower than H1, due to the
reduction in hedge volumes and lower forecast oil prices in H2.
Hedge expense incurred in the two months July to August 2022
totalled USD 1.3 million and the current MTM exposure for the
following four months is USD 1.9 million. No hedge instruments are
currently in place for 2023.
At the end of June 2022, VAT refunds outstanding were USD 5.4
million. Subsequent to 30 June 2022 the Group has received VAT
refunds of USD 2.9 million.
Trinity is participating in the 2022 Onshore and Nearshore
Competitive Bid Round which was opened by the Ministry of Energy
and Energy Industries on 8 July. This bid round contains eleven
blocks within the prolific southern basin amongst currently
producing fields; located in the Central to Southern areas within
the southern basin and Southwest Peninsula nearshore coast of
Trinidad. Bid submissions are due on 9 January 2023 with the award
of the blocks tentatively scheduled for April 2023.
The Company has purchased a data package from the Ministry
Energy and Energy Industries which Trinity's technical teams are
reviewing, and the shortlisted blocks will be subject to robust
reviews with the Technical Committee in the coming months.
In addition, on 1 September, the Ministry of Energy and Energy
Industries announced that it will be offering blocks in the Shallow
Water Competitive Bid Round in the fourth Quarter of 2022. Initial
nomination of blocks of interest is due by 11 October.
Analyst Briefing:
A briefing for Analysts will be held at 13:00 (UK time) today
via web conference. Analysts wishing to join should contact
trinity@vigoconsulting.com for details.
Investor Presentation:
The Company will also be hosting a live presentation today via
the Investor Meet Company platform at 15:00 (UK time). The
presentation is open to all existing and potential shareholders.
Questions can be submitted pre-event via your Investor Meet Company
dashboard up until 09:00 the day before the meeting or at any time
during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Trinity Exploration & Production plc via:
https://www.investormeetcompany.com/trinity-exploration-production-plc/register-investor
Enquiries
Trinity Exploration & Production Via Vigo Consulting
Nick Clayton, Non-Executive Chairman
Jeremy Bridglalsingh, Chief Executive
Officer
Julian Kennedy, Corporate Development
Manager
SPARK Advisory Partners Limited (Nominated
Adviser & Financial Adviser)
Mark Brady
James Keeshan +44 (0)20 3368 3550
Cenkos Securities PLC (Broker)
Leif Powis (Corporate Broking) +44 (0)20 7397 8900
Neil McDonald +44 (0)131 220 6939
Vigo Consulting Limited t rinity @vigoconsulting.com
Finlay Thomson/Patrick d' Ancona +44 (0)20 739 0 0230
Competent Person's Statement
All reserves and resources related information contained in this
announcement has been reviewed and approved by Dr. Ryan Ramsook,
Trinity's Executive Manager, Subsurface. Dr. Ramsook is also a
Senior Lecturer at the University of the West Indies and Fellow of
the Geological Society (FGS) of London. He is a Geologist by
background with 16+ years' experience.
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.
OPERATIONAL REVIEW
The continuing impact of the COVID-19 pandemic, compounded by
the Russian-Ukraine war, have led to significant volatility in
global oil demand and supply, and caused dramatic movements in oil
prices. While crude oil demand has continued to remain high,
boosting oil prices, Trinity has experienced increased costs and
reduced availability of materials and services as hydrocarbon
producers (local and international) compete for limited
resources.
Covid-19 has continued to affect the Company's workforce with 86
positive COVID-19 cases recorded across the West Coast, East Coast
and Onshore assets in H1 2022. Thankfully, all employees have fully
recovered and are now back to work. The impact on Trinity of the
pandemic has continued to be relatively muted, but has required
ongoing, proactive management.
H1 2022 saw increasing costs and lead times for both materials
and services. The Company sought to put contingencies in place
where possible and, despite the demand and inflationary challenges
being faced by the industry, the Company was able to deliver its
planned RCP programme, complete routine WOs, reactivations,
swabbing and automation. In addition, the Company commenced its
planned six-well onshore drilling programme and this, together with
other elements of the H2 2022 activity set, is expected to lead to
strong production levels going into Q1 2023.
Onshore operations
-- H1 2022 average net sales was 1,688 bopd, a 2% increase on
2021 (H1 2021 1,657 bopd). This increase is attributed to the
acquisition of the PS-4 licence in Q4 2021 (H1 2022: 67 bopd) and
the robust base management system implemented by the engineering
and operations teams. A total of 43 WOs were completed in H1 2022
(H1 2021: 37) in conjunction with 11 RCPs completed in H1 2022 (H1
2021: 3).
Work continued to build a more robust and analytical approach to
well surveillance and optimisation using SCADA systems. Software
designed to optimise pumping system performance was operationalised
and training completed during the period.
-- Work continues on prototyping and testing new bespoke,
automated solutions with the aim of providing a viable,
cost-effective automation option for lower tier production wells.
This has been found to be highly effective in quickly identifying
Electrical Shut Downs (" ESDs ") and limiting their impact on
production .
-- Improved sand management strategies commenced in June 2022
and are expected to continue with a particular focus on
high-producing wells prone to excessive sand production.
The H2 2022 planned work programme involves the progression of
the six-well drilling campaign as well as RCPs and ongoing base
management via WOs, reactivations and swabbing across all onshore
fields.
East Coast operations
-- H1 2022 average net sales was 1,037 bopd (H1 2021: 1,123
bopd) an 8% decrease. The decrease in sales levels was as a result
of a combination of mechanical failures of downhole pumps requiring
workovers, delayed by planned remedial platform topside work which
impacted the timing of returning the wells to production. A total
of 13 WOs were undertaken during H1 2022 (H1 2021: 6 WOs).
H2 2022 work programme will include routine WOs and
reactivations.
West Coast operations
H1 2022 average net sales was 249 bopd (H1 2021: 253 bopd). The
2% decrease in sales was the result of continued focus on
preserving base production, including increased swabbing and
optimisation activities in the field. There were 3 workovers
conducted during this period (H1 2021: 0 WOs).
H2 2022 planned work programme is expected to include 4 routine
WOs and the reactivation of the ABM 151 well.
FINANCIAL REVIEW
Income Statement Analysis
H1 2022 H1 2021 Change
Production
Average realised oil price (USD/bbl) 90.1 55.9 34.2
Average net Sales (bopd) 2,974 3,032 (58)
Statement of Comprehensive Income USD'000 USD'000 USD'000
Operating revenues 48,515 30,663 17,852
Operating expenses (including realised
Derivative expense and Covid-19 costs
but excluding Non-cash items, SPT
& PT) (35,712) (20,635) (15,077)
---------------------------------------------- ---------- ---------- ----------
Operating profit before Non-cash items,
SPT & PT 12,803 10,028 2,775
DD&A (3,884) (3,656) (228)
Other Non-Cash Items (3,568) (3,460) (108)
---------------------------------------------- ---------- ---------- ----------
Operating profit before SPT & PT 5,351 2,912 2,439
SPT (5,049) (1,971) (3,078)
PT - (288) 288
---------------------------------------------- ---------- ---------- ----------
Operating profit before exceptional
items 302 653 (351)
Exceptional items - (95) 95
---------------------------------------------- ---------- ---------- ----------
Operating Profit after Exceptional
items 302 558 (256)
Finance income 24 62 (38)
Finance cost (648) (748) 100
---------------------------------------------- ---------- ---------- ----------
Loss Before Taxation (322) (128) (194)
Income Taxation (expense)/ credit (76) 1,772 (1,848)
---------------------------------------------- ---------- ---------- ----------
(Loss)/Profit after Taxation (398) 1,644 (2,042)
Total Comprehensive (Loss)/Income
for the period
Currency translation (324) 3 (327)
---------------------------------------------- ---------- ---------- ----------
Total Comprehensive (Loss)/Income (722) 1,647 (2,369)
Operating Revenues
Operating revenues of USD 48.5 million (H1 2021: USD 30.7
million) increased due to higher realised oil price and relatively
stable production volumes sold in the period .
Operating expenses (excluding Non-cash items)
Operating expenses (excluding non-cash items) of USD (35.7)
million (H1 2021: USD (20.4) million) comprised:
-- Royalties of USD (16.2) million (H1 2021: USD (9.4) million), due to higher oil prices
-- Production costs ("Opex") of USD (9.5) million (H1 2021: USD
(8.1) million), mainly due to increased number of WOs conducted in
H1 2022 (47) (H1 2021: 37), higher swabbing costs, higher tanker
and vessel rates which were driven by higher crude oil and fuel
prices and general increased inflationary pressures.
-- G&A expenditure of USD (3.6) million (H1 2021: USD (2.9)
million), due to one-off staff related costs, increased ICT
software maintenance costs mainly related to the technical teams,
increased technical consultancy fees and increased levies due to
higher revenue recognised in H1 2022.
-- Realised derivative expense of USD (6.0) million (H1 2021:
nil) on account of higher oil prices.
-- COVID-19 related costs USD (0.4) million (H1 2021: 0.3
million classified as exceptional items in 2021) based on Trinity's
COVID-19 response plan implementation including early detection
through Covid-19 testing, offshore employee isolation (quarantine
costs) and heightened sanitisation efforts across all assets. The
Company recorded 86 positive COVID-19 cases in H1 2022 compared to
20 positive cases in H1 2021.
Non-cash operating expenses
Non-cash operating expenses comprised:
-- Depreciation, Depletion and Amortisation ("DD&A") charges
of USD (3.9) million (H1 2021: USD (3.7) million)
-- Unrealised derivative (expenses)/income USD (3.2) million (H1
2021: USD (2.1) million) comprising the movement in the fair
valuation of crude oil derivatives during the period
-- Share option expense USD (0.3) million (H1 2021: USD (0.3) million)
-- Impairment of financial assets of USD (0.1) million (H1 2021: USD (1.0) million)
-- Foreign exchange gain USD 0.0 million (H1 2021: USD (0.1) million)
Operating Profit Before Supplemental Petroleum Taxes ("SPT") and
Property Tax ("PT")
The operating profit before SPT and PT for the period amounted
to USD 5.8 million (H1 2021: USD 3.2 million) mainly due to higher
operating revenues resulting from the higher oil prices.
SPT & PT
The Group incurred SPT charges in relation to both its onshore
and offshore assets in H1 2022 of USD (5.0) million (H1 2021: (2.0)
million), on account of the realised oil price being higher than
USD 50.0/bbl throughout the period and SPT now being incurred on
onshore assets where realised price exceeded USD 75.0/bbl. There
was no accrual for PT for the period (H1 2021: USD (0.3) million).
SPT and PT are classified as "operating expenses" rather than
"income taxation" under IFRS.
Exceptional items
Exceptional items charge of nil (H1 2021: USD (0.1) million)
relate to:
-- Capital Reorganisation costs nil (H1 2021: USD (0.1) million)
Net Finance Cost
Net finance costs for the period of USD (0.6) million (H1 2021:
USD (0.7) million), comprising:
-- Unwinding of the discount on the decommissioning provision of
USD (0.6) million (H1 2021: USD (0.6) million)
-- Interest and expenses on bank overdraft - USD (0.0) million (H1 2021: USD (0.1) million)
-- Interest on leases - USD (0.0) million (H1 2021: USD (0.0) million)
Income Taxation
Taxation charge for the period was USD (0.1) million (H1 2021:
USD 1.8 million credit), comprising:
-- Petroleum Profits Tax (" PPT ") of USD (2.1) million (H1 2021: USD (0.7) million)
-- Unemployment Levy (" UL ") of USD (0.8) million (H1 2021: (0.3) million)
-- Reduction in deferred tax liability of USD 0.0 million (H1 2021: USD 0.6 million)
-- Increase in deferred tax assets of USD 2.8 million (credit)
(H1 2021: USD 2.2 million credit), due to an increase in projected
oil prices and hence taxable profits over the next three years
As at 30 June 2022, the Group had unrecognised tax losses of USD
207.4 million (H1 2021: 216.3 million) which have no expiry
date.
Total Comprehensive (Loss)/ Income
Total Comprehensive Loss for the period was USD (0.7) million
loss (H1 2021: USD 1.6 million income). The reduction is mainly
driven by the combined impact of SPT and the increase in both
realised and unrealised derivative expenses resulting from high oil
prices experienced in H1 2022.
Cash Flow Analysis
Opening Cash Balance
Trinity began the year with an initial cash balance of USD 18.3
million (2021: USD 20.2 million).
Summary of Statement of Cash Flows
H1 2022 H1 2021
USD'000 USD'000
Opening cash balance 18,312 20,237
-------------------------------------------- -------- --------
Cash movement
Cash inflow from operating activities 7,713 7,670
Changes in working capital (1,922) (2,955)
Income taxation paid (2,882) (1,201)
-------------------------------------------- -------- --------
Net cash inflow from operating activities 2,909 3,514
Net cash outflow from investing activities (5,707) (4,461)
Net cash outflow from financing activities (331) (316)
-------------------------------------------- -------- --------
Decrease in cash and cash equivalents (3,129) (1,263)
Effects of foreign exchange rates on (233) --
cash
-------------------------------------------- -------- --------
Closing cash balance 14,950 18,974
============================================ ======== ========
Net cash inflow from operating activities
Net cash inflow from operating activities was USD 2.9 million
(H1 2021: USD 3.5 million):
-- Operating activities for H1 2022 generated an operating cash
flow before changes in working capital and income taxes of USD 7.7
million (H1 2021: USD 7.7 million)
-- Changes in working capital resulted in a net decrease of USD
(1.9) million (H1 2021: net decrease of USD (3.0) million)
-- Income Taxation - PPT and UL paid USD (2.9) million (H1 2021:
USD (1.2) million) resulting from higher taxable profits
Cash outflow from investing activities
Investing cash outflows for H1 2022 was USD (5.7) million (H1
2021: USD (4.5) million) which included infrastructure investments
across Trinity's assets, production capex including RCPs in H1
2022, drilling planning and long lead investment for the drilling
campaign which began on 29 June 2022, subsurface capex, exploration
and evaluation capex including Galeota asset development costs
incurred to 31 March 2022 and renewable capex initiatives.
Net cash outflow from financing activities
Financing cash outflows for H1 2022 was USD (0.3) million
comprising USD (0.3) million cash payment on leases net of USD 0.0
million in finance income from short-term deposits (H1 2021: USD
0.3 million).
Closing Cash Balance
Trinity's cash balance at 30 June 2022 was USD 15.0 million (31
December 2021: USD 18.3 million).
Statement of Financial Position Analysis
H1 2022 YE 2021 Change
USD'000 USD'000 USD'000
Assets:
Non-current Assets 102,494 96,906 5,588
Current Assets 33,353 32,879 474
Liabilities:
Non-Current Liabilities 58,491 57,812 679
Current Liabilities 20,851 15,052 5,799
Equity and Reserves:
Capital and Reserves to Equity
Holders 56,505 56,921 (416)
Cash plus working capital
surplus 18,628 20,756 (2,128)
Non-current Assets
Non-current assets increased by 6% to USD 102.5 million at H1
2022 from USD 96.9 million at YE 2021:
-- Property, plant and equipment USD 51.8 million (YE 2021: USD
49.5 million) increase of USD 2.3 million mainly relates to USD 5.8
million investment less DDA of 3.5 million and Right of use asset
of USD 0.6 million (YE 2021: USD 0.6 million) relating to motor
vehicles, office building, staff house and office equipment leases
that met the recognition criteria of a lease under IFRS 16.
-- Intangible assets USD 31.0 million (YE 2021: USD 30.8
million) increase of USD 0.2 million mainly relates to USD 0.3
million investment less amortisation of (0.1) million
-- Deferred tax asset of USD 14.3 million (YE 2021: USD 11.5
million) increase of USD 2.8 million due to the increase in the
forecast taxable profits resulting from higher forecast oil
prices
Abandonment funds and performance bond of USD 4.7 million (YE
2021: USD 4.5 million)
-- Right of use asset of USD 0.6 million (YE 2021: USD 0.6 million)
Current Assets
Current assets increased by 2% to USD 33.4 million at H1 2022
from USD 32.9 million at YE 2021:
-- Cash and cash equivalents of USD 15.0 million (YE 2021: USD 18.3 million)
-- Trade and other receivables of USD 14.1 million (YE 2021: USD 10.8 million)
o Trade and other receivables (less impairment) of USD 6.6
million (YE 2021: USD 4.6 million)
o VAT recoverable of USD 5.4 million (YE 2021: 4.6 million)
o Prepayments and other receivables (less impairment) of USD 2.1
million (YE 2021: USD 1.6 million)
-- Inventories USD 4.3 million (YE 2021: USD 3.8 million)
Non-current Liabilities
Non-current liabilities increased to USD 58.5 million at H1 2022
from USD 57.8 million at YE 2021, primarily due to:
-- Provision for other liabilities (predominantly
decommissioning costs) of USD 56.3 million (YE 2021: USD 55.7
million)
-- Lease liability of USD 0.2 million (YE 2021: USD 0.1 million)
Current Liabilities
Current liabilities increased to USD 20.9 million at H1 2022 (YE
2021: USD 15.1 million) primarily due to:
-- Trade and other payables of USD 11.5 million (YE 2021: USD 8.9 million)
o Trade payables of USD 2.7 million (YE 2021: USD 2.3
million)
o Accruals and other payables of USD 5.7 million (YE 2021: USD
5.0 million)
o SPT payable of USD 3.1 million (YE 2021: USD 1.6 million)
-- The non-cash fair value of derivative instruments liability
increased at H1 2022, creating a current liability of USD 6.1
million (YE 2021: USD 2.9 million). These instruments were
implemented to hedge against potential fall in oil prices and are
due to expire at the year end.
-- CIBC bank overdraft facility USD 2.7 million (YE 2021: USD 2.7 million)
-- Lease liability of USD 0.5 million (YE 2021: USD 0.6 million)
Cash plus Working Capital Surplus
Cash plus working capital surplus calculated as Current Assets
less Current Liabilities (excluding Provisions for other
liabilities and Derivative assets/(liabilities)) decreased by 11%
to USD 18.6 million (YE 2021: USD 20.8 million)
Reconciliation between Adjusted EBITDA after Current Taxes and
Cash Inflow from Operating Activities
H1 2022 H1 2021
USD'000 USD'000
Adjusted EBITDA after Current Taxes 4,831 6,771
Exceptional items -- (95)
Foreign exchange gain/(loss) 41 (52)
Translation differences as per Statement of Cash
flows (41) 48
Changes in Working Capital (1,922) (2,955)
Income tax incurred 2,882 998
Income tax paid (2,882) (1,201)
Cash flow from operating activities 2,909 3,514
APPIX 1: TRADING SUMMARY
A summary of realised price, production, royalties, Opex,
G&A and operating break-evens expenditure metrics is set out
below:
Trading Summary Table
Details H1 2022 H1 2021 Change %
Realised price (USD/bbl) 90.1 55.9 61
Sales (bopd)
Onshore 1,688 1,656 2
West Coast 249 253 (2)
East Coast 1,037 1,123 (8)
Group Consolidated 2,974 3,032 (2)
Metrics (USD/bbl)
Royalties/bbl - Onshore 38.9 20.5 89
Royalties/bbl - West
Coast 16.7 10.1 66
Royalties/bbl - East
Coast 19.1 13.7 39
Royalties/bbl - Consolidated 30.1 17.1 76
Opex/bbl - Onshore 14.0 12.8 9
Opex/bbl - West Coast 28.2 22.2 27
Opex/bbl - East Coast 22.2 17.3 28
Opex/bbl - Group Consolidated 17.6 15.2 16
G&A/bbl - Group Consolidated 6.6 5.3 25
Operating break-even
(USD/bbl)
Onshore 18.5 17.9 3
West Coast 26.9 28.1 (4)
East Coast 27.2 23.2 17
Group Consolidated 32.4 27.8 17
Notes: Group consolidated operating break-even: The realised
price/bbl for which the adjusted EBITDA/bbl exclusive of net
derivative expense/income for the Group is equal to zero. H1 2021,
Covid-19 costs were not included as part of the operating
break-even KPI.
STATEMENT OF DIRECTORS' RESPONSIBILITY
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with
International Accounting Standards ("IAS") and that the interim
management report includes:
-- an indication of important events that have occurred during
the first six (6) months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six (6) 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 (6)
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
Jeremy Bridglalsingh
Chief Executive Officer
19 September 2022
INDEPENT REVIEW REPORT TO TRINITY EXPLORATION & PRODUCTION
plc
Report on the Condensed Consolidated Interim Financial
Statements
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2022 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standards and the London
Stock Exchange AIM Rules for Companies.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2022 which comprises the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Consolidated Statement of Changes in Equity and
Consolidated Cash Flow Statements.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standards.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with
the London Stock Exchange AIM Rules for Companies which require
that the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange AIM Rules for Companies for no
other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
19 September 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Trinity Exploration & Production plc
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2022
(Expressed in United States Dollars)
--------------------------------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30 June to 30 31 December
2022 June 2021 2021
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Revenues
Crude oil sales 48,514 30,663 66,257
Other income 1 -- 1
---------------------- ------------------ ---------------
48,515 30,663 66,258
Operating Expenses
Royalties (16,204) (9,387) (19,828)
Production costs (9,498) (8,139) (17,625)
Depreciation, depletion and
amortisation 8-10 (3,884) (3,656) (7,428)
General and administrative
expenses (3,581) (2,848) (7,030)
Impairment of financial
assets/net
reversal (45) (993) 754
Share option expense 14 (316) (307) (626)
Covid-19 expenses (459) (261) (669)
Foreign exchange gain/(loss) 41 (52) (14)
Realised derivative expense 3,12 (6,011) -- (1,293)
Fair value expense on derivative
instruments (3,207) (2,108) (3,149)
(43,164) (27,751) (56,908)
---------------------- ------------------ ---------------
Operating Profit Before
Supplemental
Petroleum Taxes ("SPT") and
Property
Tax ('PT") 5,351 2,912 9,350
SPT (5,049) (1,971) (5,074)
PT (charge)/net reversal -- (288) 1,516
---------------------- ------------------ ---------------
Operating Profit Before Covid
expenses,
Impairment and Exceptional Items 302 653 5,792
Impairment 4 -- -- (1,316)
Exceptional items 5 -- (95) (113)
---------------------- ------------------ ---------------
Operating Profit After Impairment
and Exceptional Items 302 558 4,363
Finance Income 7 24 62 94
Finance cost 7 (648) (748) (1,475)
---------------------- ---- ------------------ ---------------
(Loss)/Profit Before Income
Taxation (322) (128) 2,982
Income Taxation (expense)/ credit 6 (76) 1,772 4,744
---------------------- ------------------ ---------------
(Loss)/Profit for the period (398) 1,644 7,726
Other Comprehensive (loss)/Income
Currency Translation (324) 3 --
---------------------- ------------------ ---------------
Total Comprehensive (loss)/Income
for the period (722) 1,647 7,726
====================== ================== ===============
Earnings per share (expressed in
dollars per share)
Basic 20 (0.01) 0.04 0.20
Diluted 20 (0.01) 0.04 0.18
Trinity Exploration & Production plc
Condensed Consolidated Statement of Financial Position
for the period ended 30 June 2022
(Expressed in United States Dollars)
----------------------------------------------------------------------------------------------------------------------------
Notes As at 30 As at As at 31
June 2022 30 June December
2021 2021
ASSETS $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current Assets
Property, plant and
equipment 8 51,828 37,769 49,507
Right-of-use assets 9 608 762 616
Intangible assets 10 31,031 28,320 30,759
Abandonment fund 4,260 3,571 4,021
Performance bond (Investment
held
to maturity) 473 253 473
Deferred tax asset 15 14,294 8,218 11,530
---------------------- ------------------------ ----------------------------
102,494 78,893 96,906
---------------------- ------------------------ ----------------------------
Current Assets
Inventories 4,283 5,366 3,820
Trade and other receivables 11 14,120 10,120 10,747
Cash and cash equivalents 14,950 18,974 18,312
---------------------- ------------------------ ----------------------------
33,353 34,460 32,879
---------------------- ------------------------ ----------------------------
Total Assets 135,847 113,353 129,785
====================== ======================== ============================
Equity
Capital and Reserves
Attributable
to Equity Holders
Share capital 13 389 97,692 389
Share premium 13 -- 139,879 --
Share based payment reserve 14 4,087 3,586 3,784
Reverse acquisition reserve (89,268) (89,268) (89,268)
Translation reserve (1,971) (1,647) (1,650)
Retained earnings/
(accumulated
deficit) 143,268 (99,766) 143,666
---------------------- ------------------------ ----------------------------
Total Equity 56,505 50,476 56,921
Non-current Liabilities
Lease liabilities 9 202 232 97
Deferred tax liability 15 1,983 2,062 2,025
Provision for other
liabilities 16 56,295 46,563 55,690
Employee benefits 11 -- --
---------------------- ------------------------ ----------------------------
58,491 48,857 57,812
---------------------- ------------------------ ----------------------------
Current Liabilities
Trade and other payables 17 11,533 8,826 8,814
Bank overdraft 18 2,700 2,700 2,700
Lease liabilities 9 492 606 609
Derivative financial
liability 12 6,090 1,842 2,883
Provision for other
liabilities 36 46 46
---------------------- ------------------------ ----------------------------
20,851 14,020 15,052
Total Liabilities 79,342 62,877 72,864
---------------------- ------------------------ ----------------------------
Total Shareholders' Equity and
Liabilities 135,847 113,353 129,785
====================== ======================== ============================
Trinity Exploration & Production plc
Condensed Consolidated Statement of Changes in Equity
for the period ended 30 June 2022
(Expressed in United States Dollars)
----------------------------------------------------------------------------------------------------------------------
Share Share Share Reverse Merger Translation Retained Total
Capital Premium Based Acquisition Reserve Reserve Earnings/
Payment Reserve (Accumulated
Reserve Deficit)
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- --------- --------- ------------- --------- ------------ -------------- -------
Balance at 1
January 2021 97,692 139,879 14,764 (89,268) 75,467 (1,650) (188,332) 48,552
Share based payment
charge -- -- 307 -- -- -- -- 307
Capital
Reorganisation -- -- (11,485) -- (75,467) -- 86,952 --
Translation
difference -- -- -- -- -- 3 (30) (27)
Total comprehensive
profit
for the period -- -- -- -- -- -- 1,644 1,644
Balance at 30 June
2021
(unaudited) 97,692 139,879 14,773 (89,268) 75,467 (1,652) (187,655) 49,236
========= ========= ========= ============= ========= ============ ============== =======
Balance at 1
January 2022 389 -- 3,784 (89,268) -- (1,650) 143,666 56,921
Share based payment
charge -- -- 305 -- -- -- -- 305
Translation
difference -- -- (2) -- -- 3 -- 1
Total comprehensive
loss
for the period -- -- -- -- -- (324) (398) (722)
Balance at 30 June
2022
(unaudited) 389 -- 4,087 (89,268) -- (1,971) 143,268 56,505
========= ========= ========= ============= ========= ============ ============== =======
Trinity Exploration & Production plc
Condensed Consolidated Statement of Cashflows
for the period ended 30 June 2022
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year end
to 30 June to 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Activities
(Loss)/Profit before taxation (322) (128) 2,982
Adjustments for:
Translation difference (41) 48 (39)
Finance Income (24) (62) (94)
Finance cost 7 94 137 254
Share option expense 316 307 626
Finance cost - decommissioning provision 7 554 611 1,222
Depreciation, depletion and amortisation 8-10 3,884 3,656 7,428
Impairment of property, plant and
equipment 8 -- -- 96
Inventory Impairment 5 -- -- 1,220
Impairment loss/(reversal of impairment)
on financial assets 45 993 (754)
Fair value on derivative financial
instrument 3,207 2,108 3,149
Other non-cash items -- -- 47
7,713 7,670 16,137
------------------ ------------------ -------------
Changes In Working Capital
(Increase)/Decrease in Inventory (463) (99) 228
(Increase) in Trade and other receivables ( 3,657) ( 3,954) (3,019)
Increase in Trade and other payables 2,198 1,098 909
(1,922) (2,955) (1,882)
Income taxation paid (2,882) (1,201) (1,700)
------------------ ------------------ -------------
Net Cash Inflow From Operating Activities 2,909 3,514 12,555
Investing Activities
Exploration and Evaluation Assets (363) (1,079) (3,262)
Computer software and investment in
research & development (24) -- (401)
Purchase of property, plant & equipment (5,320) (3,382) (9,957)
Performance bond released -- -- (220)
Net Cash Outflow From Investing Activities (5,707) (4,461) (13,840)
------------------ ------------------ -------------
Financing Activities
Finance income 24 62 94
Finance cost (50) (87) (153)
Principal paid on lease liability (261) (241) (480)
Interest paid on lease liability (44) (50) (101)
Net Cash Outflow From Financing Activities (331) (316) (640)
------------------ ------------------ -------------
Decrease in Cash and Cash Equivalents (3,129) (1,263) (1,925)
================== ================== =============
Cash And Cash Equivalents
At beginning of period 18,312 20,237 20,237
Effects of foreign exchange rates
on cash (233) (29) 19
Decrease (3,129) (1,234) (1,944)
------------------ ------------------ -------------
At end of period 14,950 18,974 18,312
================== ================== =============
Trinity Exploration & Production plc
Notes to the Condensed Consolidated Financial Statements for the
period ended 30 June 2022
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 consolidated interim financial statements for
the six months ended 30 June 2022 have been prepared in accordance
with UK adopted International Financial Reporting Standards
("IFRS") on a going concern basis. The condensed consolidated
interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 December 2021,
which have also been prepared in accordance with IFRS.
The results for the six months ended 30 June 2022 and 30 June
2021 have been reviewed, not audited, and do not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2021 were
approved by the board of directors and delivered to the Registrar
of Companies. The report of the independent auditors on those
accounts was unqualified. The interim report has been reviewed by
the auditor.
Going Concern
The Board have adopted the going concern basis in preparing the
condensed consolidated interim financial statements.
In making their going concern assessment, the Board have
considered the Group's current financial position, budget and cash
flow forecast. For the past twelve months the Group continued to
operate with no significant effects nor interruptions from the
presence of the COVID-19 pandemic. The going concern assessment has
considered the current operating environment including inflationary
pressures, supply chain challenges and the potential impact of the
volatility of the oil price. In 2022 oil prices have trended in an
upward direction to well over US$100 and is currently fluctuating
between US$90-100 per bbl (Brent ICE). Oil prices are forecast to
remain at elevated levels over the next 12 months, which will
continue to positively impact the Group's operations.
The Group started 2022 with a steady operating and strong
financial position; 2022 average H1 2022 sales of 2,974 barrels of
oil per day ("bopd"), (H1 2021 3,032 bopd), and opening net cash
consisting of cash and short term investments of US$18.3 million
and US$2.7 million drawn under the Company's overdraft facility as
at 31 December 2021. In making their going concern assessment, the
Board considered a cash flow forecast based on expected future oil
prices, work activity and production volumes and sensitivities
surrounding volatility in crude oil prices, further cost escalation
in capital expenditure and reduced production due to potential
delays in the onshore drilling campaign. The base case forecast
included the following assumptions:
-- Future oil prices assumed to be in line with the forward
curve prevailing as at July 22, with an average realised oil price
of US$84.3/bbl in the period to December 2022. The forward price
curve applied in the cash flow forecast starts at US$90.4/bbl in
July 2022, trending down to US$80.0/bbl in December 2022 and to
US$76.1/bbl in July 2023.
-- Average forecast production for the period from July 22 to
December 2022 of 3,288 bopd and for the seven months to July 2023
of 3,509 bopd with production being maintained by RCPs, WOs and
swabbing activities as well as 6 Onshore wells (4 conventional
wells, 1 horizontal well and 1 deeper well) which started in June
2022 and 3 wells in 2023.
-- Potential cost escalations and supplier delays for the Onshore drilling campaign
-- SPT now being incurred on the Onshore assets in 2022 due to
oil prices exceeding the SPT threshold for small onshore operators
of US$ 75.0/bbl which applies until 31 December 2022. This SPT
threshold which was put in place in the 2021 Budget and is subject
for review for continuation. As such, the benefit of this higher
threshold was not considered within our forecasts for 2023.
-- The continuing impact of the crude derivative instruments for
the remainder of 2022, based on the forward curve prevailing as at
July 2022. There are no crude derivatives currently in place for
2023.
-- Trinity continuing to progress various growth and business development opportunities
As at the current date, Management considers this is a
reasonable base scenario, reflecting the outlook of the current
production profile and costs. The cash flow forecast showed that
the Group will remain in a healthy cash position for at least the
next twelve months, and as such being able to meet its liabilities
as they fall due.
Further sensitivities considered to the base case cash flow:
-- 20% reduction in crude oil prices being sustained across the
forecast period, noting that the base case pricing is in line with
market prices
-- 10% cost escalation in capital expenditure across the forecast period
-- 10% production decrease over the forecast period
Under each of these scenarios the Group's cash balances are
sufficient to meet the Group's obligations as they fall due.
Based on the cash flow forecast, when combined with mitigating
actions that are within the Group's control, the Board currently
believe the Group can maintain sufficient liquidity and a healthy
positive cash balance, and remain in operational existence, for at
least the next twelve months.
As a result, at the date of approval of the interim financial
statements, the Board have a reasonable expectation that the Group
has sufficient and adequate resources to continue in existence for
at least twelve months post approval of these financial statements
and is poised for continued growth. For this reason, the Board have
concluded it is appropriate to continue to adopt the going concern
basis of accounting in the preparation of the condensed
consolidated interim financial statements.
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year 31 December 2021 and corresponding interim
reporting period, except for those set out in the standards
below:
- New standards and amendments effective for periods beginning
on 1 January 2022 and therefore relevant to these condensed
consolidated interim financial statements
-- Conceptual Framework for Financial Reporting (Amendments to IFRS 3)
-- IAS 37 Provisions, Contingent Liabilities and Contingent
Assets (Amendment - Onerous Contracts - Cost of Fulfilling a
Contract)
-- IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use)
Estimates
The preparation of condensed consolidated 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 consolidated 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
consolidated financial statements for the year ended 31 December
2021.
Cash and cash equivalents
For the purpose of presentation in the condensed consolidated
statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, and other
short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts
of cash.
Trade receivables
Trade receivables are amounts due from the Group's sole customer
for crude oil sold in the ordinary course of business. They are
generally due for settlement within 30 days and therefore are all
classified as current. Trade receivables are recognised initially
at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognised
at fair value.
Impairment of financial assets
The Group applied the simplified approach to determine
impairment of its trade and other receivables. The simplified
approach requires expected lifetime losses to be recognised from
initial recognition of the receivables. This involves determining
the expected loss rates using a provision matrix that is based on
the Group's historical default rates observed over the expected
life of the receivables and adjusted for forward looking estimates.
This is then applied to the gross carrying amount of the
receivables to arrive at the loss allowance for the period.
Financial assets recognition of impairment provisions under IFRS
9 is based on the expected credit losses ("ECL") model. The ECL
model is applicable to financial assets classified at amortised
cost and contract assets under IFRS 15: Revenue from Contracts with
Customers. The measurement of ECL reflects an unbiased and
probability weighted amount that is available without undue cost or
effort at the reporting date, about past events, current conditions
and forecasts of future economic conditions.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest rate method.
Segment Information
Management have considered the requirements of IFRS 8 Operating
Segments, in regard to the determination of operating segments, and
concluded that the Group has only one significant operating segment
being the exploration and development, production and extraction of
hydrocarbons.
All revenue is generated from crude oil sales in Trinidad and
Tobago ("T&T") to one customer, Heritage Petroleum Company
Limited ("Heritage"). All non-current assets of the Group are
located in T&T.
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.
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 consolidated 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 2021,
which can be found at www.trinityexploration.com .
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and short-term funds and the availability of funding through
an adequate amount of committed credit facilities. Management
monitors rolling forecasts of the Group's liquidity and cash and
cash equivalents on the basis of expected cash flow. As at 30 June
2022, the Group held cash at bank of $15.0 million (2021: $18.3
million).
Credit risk
Credit risk arises from Cash and Cash equivalents, deposits with
banks and financial institutions, as well as credit exposures to
customers, including outstanding receivables. For banks and
financial institutions, management determines the placement of
funds based on its judgement and experience to minimise risk.
All sales are made to a state-owned entity -Heritage.
3 Derivative expense
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
Realised derivative expense (6,011) -- (1,293)
FV of derivative financial instruments (3,207) (2,108) (3,149)
Total expense (9,218) (2,108) (4,442)
======================== ======== ==============
4 Impairment
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
Impairment of inventory -- -- 1,220
Impairment of property, plant and
equipment -- -- 96
========= ======== ============
Total expense -- -- 1,316
========= ======== ============
There were no impairment charges in the current period.
Inventory totaling US$ 0.1 million were written off in July 2022.
These items were previously provided for.
5 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 condensed interim financial statements
are highlighted below.
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
Fees relating to Capital Reorganisation -- (95) (113)
Exceptional items charge -- (95) (113)
======== ======== ============
6 Income taxation (expense/(credit)
a. Taxation 30 June 30 June 31 December
2022 2021 2021
Current tax $'000 $'000 $'000
Petroleum profits tax 2,058 713 982
Unemployment levy 824 285 393
Deferred tax
* Current period
Movement in asset due to tax losses
recognised (Note 15) (2,764) (2,221) (5,533)
Movement in liability due to accelerated
tax depreciation (note 15) (42) (549) (586)
Income tax expense/(credit) 76 (1,772) (4,744)
======== ======== ============
Current tax: The Group's effective tax rate varies based on
jurisdiction
30 June 31 December
Tax rates: 30 June 2022 2021 2021
$'000 $'000 $'000
Corporation Tax UK 19% 19% 19%
Corporation Tax TT 30% 30% 30%
Petroleum Profits Tax 50% 50% 50%
Unemployment levy 5% 5% 5%
Deferred tax: The Group has a deferred tax asset of $14.3
million on its condensed consolidated statement of financial
position which is the amount it expects to recover within 3 years
based on the expected taxable profits generated by Group companies
over that period.
The increase in the deferred tax asset is related to the
increase in realised price and forecasted production.
7 Finance income
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
Interest income 24 62 94
======== ======== ============
Finance costs
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
Decommissioning - Unwinding of
discount (554) (611) (1,222)
Interest and other expenses on
overdraft (50) (87) (152)
Interest on leases (44) (50) (101)
-------- -------- ------------
(648) (748) (1,475)
======== ======== ============
8 Property, Plant and Equipment
Plant Leasehold Oil &
& Equipment & Buildings Gas Property Other Total
$'000 $'000 $'000 $'000 $'000
-------------- ------------- -------------- ------ ------------
Opening net book amount at 1
January 2022 2,919 1,388 45,200 -- 49,507
Additions 1,803 66 3,964 -- 5,833
DD&A charge for period (275) (93) (3,146) -- (3,514)
Translation difference -- -- 2 -- 2
Closing net book amount at 30
June 2022 4,447 1,361 46,020 -- 51,828
============== ============= ============== ====== ============
At 30 June 2022
Cost 18,059 3,478 322,168 336 344,041
Accumulated DD&A and impairment (13,612) (2,117) (276,150) (336) (292,215)
Translation difference -- -- 2 -- 2
Closing net book amount at 30
June 2022 4,447 1,361 46,020 -- 51,828
============== ============= ============== ====== ============
Plant Leasehold Oil &
& Equipment & Buildings Gas Property Other Total
$'000 $'000 $'000 $'000 $'000
-------------- ------------- -------------- ------ ----------
Opening net book amount at 1
January 2021 2,028 1,481 34,247 -- 37,756
Additions 641 10 2,694 -- 3,345
DD&A charge for period (187) (83) (3,065) -- (3,335)
Translation difference -- -- 3 -- 3
Closing net book amount 30 June
2021 2,482 1,408 33,879 -- 37,769
============== ============= ============== ====== ==========
Period ended 30 June 2021
Cost 15,569 3,348 303,696 336 322,949
Accumulated DD&A and impairment (13,087) (1,940) (269,820) (336) (285,183)
Translation difference -- -- 3 -- 3
-------------- ------------- -------------- ------ ----------
Closing net book amount 30 June
2021 2,482 1,408 33,879 -- 37,769
============== ============= ============== ====== ==========
Plant Leasehold Oil &
& Equipment & Buildings Gas Assets Other Total
$'000 $'000 $'000 $'000 $'000
-------------- ------------- -------------- ------ ----------
Year ended 31 December 2021
Opening net book amount at 1
January 2021 2,028 1,481 32.247 -- 37,756
Disposals -- -- -- -- --
Additions 1,328 74 8,794 -- 10,196
Adjustment for decommissioning
estimate -- -- 8,407 -- 8,407
Impairment charge (note 4) -- -- (96) -- (96)
DD&A charge for year (437) (167) (6153) -- (6,757)
Translation differences -- -- 1 -- 1
============== ============= ============== ====== ============
Closing net book amount 31 December
2021 2,919 1,388 45,200 -- 49,507
============== ============= ============== ====== ==========
At 31 December 2021
Cost 16,222 3,412 318,058 336 338,028
Accumulated DD&A and impairment (13,303) (2,024) (272,858) (336) (288,521)
Closing net book amount 2,919 1,388 45,200 -- 49,507
============== ============= ============== ====== ==========
9 Leases
(i) Amounts recognised in the condensed consolidated statement of financial position
The condensed consolidated statement of financial position shows
the following amounts relating to leases:
31 December
30 June 2022 30 June 2021 2021
$'000 $'000 $'000
Right-of-use assets
Non-current assets 608 762 616
============= ============= ============
Lease Liabilities
Current 492 606 609
Non-current 202 232 97
694 838 706
============= ============= ============
The ROU assets relate to motor vehicles, office building, staff
house and office equipment leases that met the recognition criteria
of a Lease under IFRS 16.
(ii) Amounts recognised in the condensed consolidated statement of comprehensive income
The condensed consolidated statement of comprehensive income
shows the following amounts relating to leases:
30 June 2022 30 June 31 December
2021 2021
$'000 $'000 $'000
Depreciation charge of ROU
assets
Depreciation (258) (251) (505)
=================== ======== ============
Interest expense (including
finance cost) (44) (50) (101)
=================== ======== ============
The total cash outflow for leases in June 2022 was $0.3 million
(June 2021: $0.3 million)
10 Intangible Assets
Computer Software Exploration and evaluation Research and Development Total
assets
$'000 $'000 $'000 $'000
Opening net book amount at 1
January 2022 496 30,217 46 30,759
Additions 24 219 141 384
Amortisation charge for the
year (112) -- -- (112)
At 30 June 2022 408 30,436 187 31,031
------------------ ------------------------------ ------------------------- -------
Opening net book amount at 1
January 2021 307 27,042 -- 27,042
Additions 111 930 -- 1,041
Amortisation charge for the
year (70) -- -- (70)
Closing net book amount at 30
June 2021 348 27,972 -- 28,320
------------------ ------------------------------ ------------------------- -------
Opening net book amount at 1
January 2021 307 27,042 46 27,349
Additions 355 3,175 -- 3,576
Amortisation charge for the
year (166) -- -- (166)
Closing net book amount at 31
December 2021 496 30,217 46 30,759
================== ============================== ========================= =======
- Computer Software: Costs incurred in connection with
software.
- Exploration and Evaluation asset: represents the cost of the
TGAL 1 exploration well and further Galeota E&E costs.
- Research and Development: In 2021, costs incurred in
connection with various renewable energy initiatives.
11 Trade and Other Receivables
30 June 30 June 31 December
2022 2021 2021
Due within one year $'000 $'000 $'000
Trade receivables 6,650 4,545 4,641
Less: provision for impairment of trade
receivables (1) (6) (350) (6)
-------- -------- ------------
Trade receivables: net 6,644 4,195 4,635
Prepayments 1,084 1,886 895
VAT recoverable 5,364 3,677 4,550
Other receivables* 1,174 1,865 767
Less: Provision for Impairment of other
receivables (146) (1,503) (100)
14,120 10,120 10,747
======== ======== ============
The fair value of trade and other receivables approximate their
carrying amounts.
The Group applies the IFRS 9 simplified model for measuring ECL
which uses a lifetime expected loss allowance and are measured on
the days past due criterion.
Trade receivables - Heritage net sales receipts have been
collected on a timely basis. Since the Joint Interest Billing
("Jibs") balances are outstanding, an ECL was calculated at 30 June
2022 of $0.1 million (31 December 2021: $0.1 million) against Other
receivables.
VAT recoverable - As at 31 December 2021 the VAT recoverable
amount was $4.6m. During the period ending 30 June 2022, the Group
generated future refunds of $1.4 million, net refunds received
amounted to $0.6 million.
12 Derivative Financial Liabilities
The following table compares the carrying amounts and fair
values of the group's financial assets and financial liabilities as
at 30 June 2022.
As at 30 As at June As at 31
June 2022 2021 December
2021
$'000 $'000 $'000
Derivative Liability (6,090) (1,842) (2,883)
---------- -------------- ---------
Total (6,090) (1,842) (2,883)
========== ============== =========
The group considers that the carrying amount of the following
financial assets and financial liabilities are a reasonable
approximation of their fair value:
- Trade receivables
- Trade payables
- Cash and cash equivalents
Fair Value Hierarchy
The level in the fair value hierarchy within which the
derivative financial asset is categorised is determined on the
basis of the lowest level input that is significant to the fair
value measurement.
The derivative financial assets are classified in their entirety
into only one of the three levels.
The fair value hierarchy has the following level:
- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
- Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Level 2 recurring fair value measurements:
As at 31 December
2021
As at 30 As at 30
June 2022 June 2021
$'000 $'000 $'000
Opening balance (2,883) 266 266
Opening derivative instrument
realised 2,883 -- (266)
Derivative expense (loss in
fair value) (6,090) (2,108) (2,883)
-------------- -------------- --------------------
Closing balance (6,090) (1,842) (2,883)
============== ============== ====================
On 30 June 2022 the crude derivative contracts were valued using
a Mark to Market report. The report provides estimated forward
looking values on the existing crude derivatives held at 30 June
2022.
13 Share Capital
Number of Share Share Total
shares capital premium
$'000 $'000 $'000
As at 1 January 2022 38,879,431 389 -- 389
As at June 2022 38,879,431 389 -- 389
=========== ========= ========= =======
- The Company does not have a limited amount of authorised share
capital.
14 Share Based Payment Reserve
The share-based payments reserve is used to recognise:
- The grant date fair value of options issued to employees but
not exercised
- The grant date fair value of share awards issued to
employees
- The grant date fair value of deferred share awards granted to
employees but not yet vested; and
- The issue of shares held by the Employee Share Trust to
employees.
During 2022 the Group had in place share-based payment
arrangements for its employees and Executive Directors, the LTIP.
The Share Option Plan is fully vested and expensed. The current
year charge through share based payments are in relation to the
LTIP arrangements shown below:
30 June 31 December
30 June 2022 2021 2021
$'000 $'000 $'000
At 1 January 3,784 14,764 14,764
Capital reduction -- (11,485) (11,485)
Share based payment expense:
Long term incentive plan 305 307 505
Translation difference (2) -- --
At 30 June/31 December 4,087 3,586 3,784
============= =============== ===============
2022 LTIPs
On 7 June 2022, Options over a total of 290,000 ordinary shares
were granted under the LTIP in accordance with a revised LTIP
scheme ("the Revised LTIP") to members of the Executive Management
Team (EMT) in respect of the Company's performance in the year to
31 December 2021. These LTIP awards will vest on 1 January 2025,
subject to meeting the performance criteria set and continued
employment in the Company.
The performance targets set for awards made under the June 2022
Annual LTIP Award will be measured considering both the Company's
absolute TSR performance and the Company's relative TSR performance
over a three-year period, commencing with the current financial
year of the Company (i.e., a measurement period of 1 January 2022
to 31 December 2024). TSR calculations will be determined by
reference to the volume weighted three-month average price prior to
the start and end of the measurement period (with the starting
average price adjusted for the Share Consolidation).
The performance targets provide that:
-- No portion of a distinct one-half of the June 2022 Annual
LTIP Award (the "Absolute TSR Part") may vest unless the Company's
compound annual growth rate of TSR over the performance period is
at least 10% p.a., for which 30% of the Absolute TSR Part may vest,
rising on a straight-line basis for full vesting of the Absolute
TSR Part if the Company's compound annual growth rate of TSR over
the performance period equals or exceeds 20% p.a.
-- No portion of the other distinct one-half of the June 2022
Annual LTIP Award (the "Relative TSR Part") may vest unless the
Company's TSR over the performance period ranks at least median
relative to the TSR performance within a comparator group of
companies, for which 30% of the Relative TSR Part may vest, rising
on a straight line basis for full vesting of the Relative TSR Part
if the Company's TSR over the performance period ranks upper
quartile or better relative to the TSR performance within a
comparator group.
However, an underpin term applies to the Relative TSR Part which
provides that, regardless of relative TSR performance, no vesting
may ordinarily accrue in respect of the Relative TSR Part unless
the Company's compound annual growth rate of TSR over the
performance period is at least 10% per annum.
June 2022 LTIPs
Grant Date 6 June 2022
Share price at grant dates GBP135.00p
Exercise price GBP0.00
Expected volatility 79.0%
Risk-free interest rates 1.83%
Expected dividend yields 0%
Vesting dates 1 January 2025
15 Deferred Income Taxation
The analysis of deferred income taxes is as follows:
30 June 30 June 31 December
2022 2021 2021
Deferred tax assets: $'000 $'000 $'000
-Deferred tax assets to be recovered
in more than 12 months (14,294) (8,218) (11,530)
========= ======== ============
Deferred tax liabilities:
-Deferred tax liabilities to be settled
in more than 12 months 1,982 2,062 2,025
========= ======== ============
The deferred tax balances are analysed below:
1 January 30 June 31 Dec 30 June
2021 Movement 2021 Movement 2021 Movement 2022
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Deferred tax
assets
Tax losses
recognised (5,997) (2,221) (8,218) (3,312) (11,530) (2,764) (14,294)
(5,997) (2,221) (8,218) (3,312) (11,530) (2,764) (14,294)
=============================== ==================================== =================== =================== =================== ======================== =======================
Deferred tax
liabilities
Accelerated
tax
depreciation 14,347 (508) 13,839 -- 13,839 -- 13,839
Fair value
uplift (11,737) (41) (11,778) (37) (11,815) (43) (11,857)
2,611 (549) 2,062 (37) 2,025 (43) 1,982
=============================== ==================================== =================== =================== =================== ======================== =======================
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 are probable. The Group
recognises deferred tax assets over a 3 year outlook which is
conservative and consistent with prior periods. There was an
increase in the deferred tax assets of $ 2.8 million in the current
year (2021: $ 2.2 million increase). Deferred tax liabilities have
reduced by $ 0.0 million (2021: $ 0.5 million decrease) as the
temporary differences between the accounting values and tax values
decreased compared to the prior period. The Group has unrecognised
tax losses amounting to $ 207.4 million which have no expiry date
(2021: $ 216.3 million).
Deferred tax assets and liabilities are not shown offset in this
condensed consolidated statement of financial position. Deferred
tax assets and liabilities can only be offset if an entity has a
legal right to settle current tax amounts on a net basis and
Deferred Tax amounts are levied by the same tax authority (as per
IAS 12).
16 Provisions and Other Liabilities
Non-Current: Decommissioning Closure of
cost pits Total
$'000 $'000 $'000
6 months ended 30 June 2022
Opening amount as at 1 January
2022 55,220 470 55,690
Unwinding of discount 554 -- 554
Revision to estimates -- (3) (3)
Translation differences 54 -- 54
---------------- ----------- -------
Closing balance as at 30
June 2022 55,828 466 56,295
================ =========== =======
6 months ended 30 June 2021
Opening amount as at 1 January
2021 45,405 470 45,875
Unwinding of discount 611 -- 611
Translation differences 77 -- 77
---------------- ----------- -------
Closing balance as at 30
June 2021 46,093 470 46,563
================ =========== =======
Year ended 31 December 2021
Opening amount as at 1 January
2021 45,405 470 45,875
Unwinding of discount 1,222 -- 1,222
Revision to estimates 8,407 -- 8,407
Decommissioning contribution 195 195
Translation differences (9) -- (9)
Closing balance at 31 December
2021 55,220 470 55,690
================ =========== =======
Current: Litigation claims
$'000
6 months ended 30 June 2022
Opening amount as at 1 January 2022 46
Settlements (10)
------------------
Closing balance as at 30 June 2021 36
==================
6 months ended 30 June 2021
Opening amount as at 1 January 2021 46
Closing balance as at 30 June 2021 46
==================
Year ended 31 December 2021
Opening amount as at 1 January 2021 46
Closing balance at 31 December 2021 46
==================
17 Trade and Other Payables
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
-------- -------- ------------
Trade payables 2,733 2,141 2,274
Accruals 5,246 2,931 4,486
Other payables 454 543 492
SPT 3,100 3,211 1,562
11,533 8,826 8,814
======== ======== ============
18 Bank Overdraft
30 June 30 June 31 December
2022 2021 2021
$'000 $'000 $'000
-------- -------- ------------
Bank Overdraft 2,700 2,700 2,700
2,700 2,700 2,700
======== ======== ============
A repayable on demand overdraft facility of $2.7 million was
entered with FirstCaribbean International Bank (Trinidad &
Tobago) Limited ("CIBC") during 2020. The facility was increased on
5 January 2021 by $2.3 million to a total of $5.0 million, and the
additional $2.3 million remains undrawn to date. The facility is
maintained to fund working capital requirements of the Group,
particularly those arising due to the delay in receiving VAT
refunds.
Details of the overdraft facility:
- Description: $5 million demand revolving credit facility
- Interest Rate: United States Prime rate (currently 9%) minus
4.05 % per annum, with a present effective rate 4.95%, subject to a
floor rate of 3.95%
- Repayment: Upon demand at CIBC's discretion
- Debenture: Floating charge debenture over Inventory and Trade
Receivables only
- Covenant: Current Ratio not less than 1.25:1
19 Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure used by the Group to
measure business performance. It is calculated as Operating Profit
before SPT & PT for the period, adjusted for non-cash items
being DD&A, ILFA, SOE, Fair value gain/loss on Derivatives and
Foreign exchange gain/loss.
The Group presents Adjusted EBITDA as it is used in assessing
the Group's operating performance as management believes it better
illustrates the underlying performance of the Group's business by
excluding non-cash items not considered by management to reflect
the underlying operations of the Group.
Adjusted EBITDA is calculated as follows:
6 months 6 months Year ended
to 30 June to 30 June December
2022 2021 2021
$'000 $'000 $'000
------------------ ----------------- ----------------
Operating Profit Before SPT &
PT 5,351 2,912 9,350
Depreciation, depletion and amortisation 3,884 3,656 7,428
Share option expense 316 307 626
Impairment/(reversal of impairment)
of financial assets 45 993 (754)
Fair value of derivative instruments 3,207 2,108 3,149
Foreign exchange (gain)/loss/ (41) 52 14
Adjusted EBITDA 12,762 10,028 19,813
$'000 $'000 $'000
Weighted average ordinary shares
outstanding - basic 38,879 38,879 38,879
Weighted average ordinary shares
outstanding - diluted 42,550 42,036 42,260
$ $ $
Adjusted EBITDA per share - basic 0.33 0.26 0.53
Adjusted EBITDA per share - diluted 0.30 0.24 0.48
Adjusted EBITDA after the impact of Current Taxes (SPT, PT, UL
and PPT) is calculated as follows:
6 months 6 months Year ended
to 30 June to 30 June December 2021
2022 2021
$'000 $'000 $'000
Adjusted EBITDA 12,762 10,028 19,813
SPT (5,049) (1,971) (5,074)
PT -- (288) 1,516
PPT/UL (2,882) (998) (1,375)
Adjusted EBITDA after Current
Taxes 4,831 6,771 14,880
'000 '000 '000
Weighted average ordinary shares
outstanding - basic 38,879 38,879 38,879
Weighted average ordinary shares
outstanding - diluted 42,550 42,036 42,260
$ $ $
Adjusted EBITDA after Current
Taxes per share - basic 0.12 0.17 0.40
Adjusted EBITDA after Current
Taxes per share - diluted 0.11 0.16 0.37
Note Adjusted EBITDA for 6months to 30 June 2021 was updated to
reflect Covid-19 expenses.
20 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.
(Loss)/Profit Weighted Earnings Per
$'000 Average Number Share $
Of Shares
'000
Period ended 30 June 2022
Basic (398) 38,879 (0.01)
Diluted (398) 38,879 (0.01)
Period ended 30 June 2021
Basic 1,644 38,879 0.04
Diluted 1,644 42,036 0.04
Year ended 31 December
2021
Basic 7,726 38,879 0.20
Diluted 7,726 42,260 0.18
Impact of dilutive ordinary shares :
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 awards
issued under the Company's LTIP are considered potential ordinary
shares. Share Options of 28,954 are also considered potential
ordinary shares but have not been included as the exercise hurdle
would not have been met.
There was no impact on the weighted average number of shares
outstanding as at 30 June 2022 as all Share Options and LTIP's were
excluded from the weighted average dilutive share calculation
because their effect would be anti-dilutive and therefore both
basic and diluted earnings per share are the same as 30 June
2022.
21 Contingent Liabilities
i) The West Coast Point Ligoure, Guapo Bay and Brighton Marine
Outer ("PGB") licences and the Farm-Out Agreement for the Tabaquite
Block (held by Coastline International Inc.) have expired. There
may be additional liabilities and commitments arising when new
agreements are finalised, but these cannot be presently quantified
until new agreements are available.
ii) Parent Company Guarantee:
a) PGB - A Letter of Guarantee has been established in substance
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. A
clause within the Letter of Guarantee implies that the Guarantor
may reduce the Guarantee Sum available for payment to the MEEI
under the Letter of Guarantee on an obligation-by-obligation basis
provided PGB delivers to the Guarantor a certificate duly issued
and signed by the MEEI. The PGB licence has expired.
b) Galeota - A Letter of Guarantee has been established in
substance over the Galeota Block where a subsidiary of Trinity is
obliged to carry out a Minimum Work Programme to the value of $0.9
million. A clause within the Letter of Guarantee implies that the
Guarantor may reduce the Guarantee Sum available for payment to the
MEEI under the Letter of Guarantee on an obligation-by-obligation
basis provided the subsidiary of Trinity delivers to the Guarantor
a certificate duly issued and signed by the Minister of the MEEI.
The Letter of Guarantee was effective from 14 July 2021 until the
earlier of performance of Minimum Work Programme or the Guarantor
has paid the Guarantee amount.
iii) The Group is party to various claims and actions.
Management has 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 condensed consolidated
financial statements.
iv) On 1 December 2021, Trinity acquired the PS-4 Block Lease
Operatorship Sub-Licence. As part of the lease agreement, a
Performance Bond of $0.13 million was executed with Heritage on 27
April 2022.
22 Events after the Reporting Period
i) Subsequent to 30 June 2022, the Group has received VAT refunds of US$ 2.9 million
ii) During July and August 2022, the Group incurred US$1.3
million of hedging costs. As at 31 August 2022, the fair value of
the Group's remaining hedge exposure was US$1.9 million. The
remaining hedges expire as at 31 December 2022.
Type of Index Sell Buy Sell Buy Production Execution Effective Expiry Fair
Hedge Put Put Call Call Date Date Date Value
31 Aug
22
US$ US$/bbl US$/bbl US$/bbl US$/bbl bbls US$ Million
3-Way 31
Cost ICE 2 Jun 1 Jan Dec
Collar Brent 50.0 60.0 74.4 - 12,500 21 22 22 (1.0)
3-Way 31
Cost ICE 27 Aug 1 Jan Dec
Collar Brent 40.0 50.0 80.5 - 15,000 21 22 22 (0.9)
Put 31
spread ICE 14 Jan 1 Jul Dec
option Brent 40.0 50.0 - - 15,000 22 22 22 nil
iii) On 9 September 2022, the Company announced that 1,214,744
unvested options lapsed as at 30 June 2022. Accordingly, the
Company's current issued share capital amounted to 39,884,637,
vested but unexercised options amounted to 308,775 (representing
0.8 per cent of the Company's issued share capital) and a further
996,586 options (representing 2.5 per cent of the Company's issued
share capital) are "in flight" (i.e unvested and subject to
performance criteria).
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END
IR FKLLFLKLBBBQ
(END) Dow Jones Newswires
September 20, 2022 02:00 ET (06:00 GMT)
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