TIDMTRIN
RNS Number : 3326D
Trinity Exploration & Production
19 October 2022
This announcement contains inside information as stipulated
under the UK version of the Market Abuse Regulation No 596/2014
which is part of English Law by virtue of the European (Withdrawal)
Act 2018, as amended. On publication of this announcement via a
Regulatory Information Service, this information is considered to
be in the public domain.
19 October 2022
Trinity Exploration & Production plc
("Trinity" or "the Group" or "the Company")
Q3 2022 Operational Update
Trinity Exploration & Production plc (AIM: TRIN), the
independent E&P company focused on Trinidad and Tobago ,
provides an update on operations for the three-month period ended
30 September 2022 ("Q3 2022" or "the Period").
The Company maintained robust production in the Period, leading
to a 25% increase in operating cash flow, before corporate taxes
and pre-hedging. The first two wells of the six-well, fully-funded
onshore drilling campaign were safely drilled, completed and
brought into production during the Period. These wells commenced
production at an initial aggregate rate of approximately 113 bopd.
The third well in the programme has subsequently been drilled
successfully and is in the process of being completed, with
production anticipated to commence within the next two weeks.
Extended supply chain lead times for specialist drilling tools
will result in a delay to the Company's planned horizontal well,
which is now expected to be drilled in Q2 2023. The Company has
taken the decision to delay the fourth conventional well in the
programme, which was scheduled to be drilled immediately in advance
of the horizontal well, to create operational synergies with the
rig operations across these two wells. The Company is actively
looking to drill the planned deep well, or additional conventional
wells, in advance of the horizontal well, but any decision will be
subject to matters outside of the Company's control including
regulatory approvals and supply chain constraints.
The Company's production guidance for 2022 remains unchanged at
2,900-3,100 bopd.
The Company's successful drilling campaign, along with its
programme of workovers and recompletions, is forecast to lead to a
material increase in operating cash flow for 2023, for which no
hedging instruments are in place and the Company will see the
benefit of the recent reforms to Supplemental Petroleum Tax
("SPT").
As announced on 18 October, the Company's share buyback
programme was successfully completed on 17 October, with 672,000
Ordinary Shares repurchased for a total consideration of
approximately US$1m. The Board will consider a further share
buyback programme.
Jeremy Bridglalsingh, Chief Executive Officer of Trinity,
commented:
"A key element of delivering Trinity's strategy is maintaining,
and now increasing, our base production, with results from the
first three wells in our drilling campaign being in line with our
expectations. The difficulties with the global supply chain for our
horizontal well is frustrating, but notwithstanding these issues,
we are pleased that we will begin to see the impact of the current
drilling campaign by the end of October 2022, and a meaningful
step-change in production is expected in 2023 when the horizontal
and deep wells are expected to be on production.
I welcomed the fiscal reforms announced by the Government of
Trinidad and Tobago, which will reduce the amount of tax we will
pay from next year. The Company will continue to champion further
tax and regulatory reform to make investment in Trinidad
competitive in an international context.
Trinity has a strong hopper of exciting opportunities, which
include further drilling in our core onshore areas, the East Coast
Galeota licence and participation in the ongoing onshore licence
round.
I am pleased that we have built a resilient business and we are
now targeting significant opportunities in our portfolio that have
the potential to deliver material economic returns to the Company
and its shareholders."
Q3 2022 Operational Highlights
-- Safely progressing the fully-funded drilling campaign within
the WD-5/6 and Forest Reserve onshore blocks:
-- The first two wells (PS 612 and PS 613) successfully
encountered target reservoir sections as prognosed, confirming our
pre -drill expectations and were brought into production during the
Period. Initial aggregate production from these two wells was
approximately 113 bopd, within the expected range.
-- The third well has subsequently been drilled successfully and
is currently on production test.
-- Stable production:
-- Q3 2022 production sold averaged 2,990 bopd (Q2 2022: 3,019 bopd; Q3 2021: 2,923 bopd).
-- Year to date 2022 (Q1-Q3) average production volumes sold of
2,979 bopd, broadly flat year-on-year (Q1-Q3 2021: 2,995 bopd).
-- Five recompletions (Q2 2022: 9) and 32 workovers (Q2 2022:
31) were completed during the period, with swabbing continuing
across the Onshore and West Coast assets.
-- Ongoing benefits from onshore automation:
-- Production volatility has been reduced and in WD 5/6
production volumes from automated wells have increased marginally
rather than exhibiting the usual anticipated decline rates.
-- Workovers in the automated wells have been reduced by 10%.
-- Net average production guidance for 2022 remains 2,900-3,100 bopd (2021: 3,006 bopd).
Q2 2022 Financial Highlights
-- Q2 2022 average realisation of US$84.3/bbl (Q2 2022: US$96.8/bbl; Q3 2021: US$ 62.6 /bbl).
-- Operating cash flow pre-tax and pre-hedging of US$8.6m
(unaudited), an increase of 25% compared to the previous quarter
(Q2 2022: US$6.9m).
-- Cash balance of US$16.5m (unaudited) as at 30 September 2022
(US$15.0m as at 30 June 2022), reflecting the combination of strong
operating cash generation, the impact of which has been reduced due
to hedging related payments and increased capex; primarily the
drilling campaign, and receipt of VAT refunds during the
Period.
-- The Company commenced a US$1m share buyback programme which
was successfully completed on 17 October, with 672,000 Ordinary
Shares repurchased.
-- Average operating break-even for Q3 2022 was US$32.2/bbl
(unaudited) (Q2 2022: US$31.3/bbl; Q3 2021: US$27.8/bbl).
Fiscal Reforms
The Government of Trinidad and Tobago's 2023 Budget Statement
announced proposed reforms to the SPT . The changes for onshore
production will positively impact our cashflow, thereby increasing
our capacity to reinvest.
Trinity's Galeota East Coast licence will benefit from the
proposals for reduced SPT for new shallow marine wells. The Company
paused a farm-out process in May 2022 in anticipation of fiscal
reform, and is now progressing alternative development concepts for
Galeota, specifically the potential to drill the Echo structure
from the existing Trintes field platforms as part of a broader
concept to accelerate the production of existing 2P reserves from
Trintes. This could enable Trinity to deliver a lower-risk
development solution that is more capital efficient and delivers
production earlier than if a new standalone platform was used.
Similar fiscal benefits will accrue to initiatives on the Company's
West Coast assets that we expect to progress in 2023.
Enquiries:
Trinity Exploration & Production plc Via Vigo Consulting
Nick Clayton, Non- Executive Chairman
Jeremy Bridglalsingh, Chief Executive Officer
Julian Kennedy, Corporate Development Manager
SPARK Advisory Partners Limited
(Nominated Adviser and Financial Adviser)
Mark Brady
James Keeshan +44 (0)20 3368 3550
Cenkos Securities PLC (Broker)
Leif Powis +44 (0)20 7397 8900
Neil McDonald +44 (0)131 220 6939
Vigo Consulting Limited trinity@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.
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