Trinity, the independent E&P company focused on Trinidad & Tobago, has announced its unaudited interim results for the six-month period ended 30 June 2021.
2021 Year to Date Strategic Highlights
H1 2021 saw continued financial and operating resilience, but more importantly significant progression of a number of important strategic initiatives as the Group positions itself to deliver a step change in scale - establishing a broader opportunity set from which to grow.
The new 10 year Lease Operatorship Agreements ('LOAs') and less onerous Supplemental Petroleum Tax ('SPT') regime for onshore producers, provides a much improved commercial backdrop for our extensive efforts to scale-up our Onshore operations. With an operating break-even price of USD 17.9/bbl across our Onshore base, adding incremental production offers the potential to generate significant free cash flow. To this end, the onshore 3D Seismic interpretation is progressing at pace, with a dedicated team maturing plays and drilling candidates, and the Onshore opportunity set will be expanded further when the pending PS-4 acquisition is completed (now expected early Q4 2021). The 3D Seismic work is also of significant benefit for our review of the potentially high impact onshore North West District ('NWD') bid process which we are progressing alongside our partner.
The combination of the new 25 year Galeota Licence (with Trinity now having a 100% working interest ('WI')), and improved commercial arrangements with Heritage (most notably a material reduction in overriding royalty rates and a more transparent oil pricing formula), has created a much enhanced commercial backdrop for this asset. The improved certainty and visibility of Galeota's value to Trinity and potential funding partners will enable Trinity to progress a farm-down process, with marketing now expected to commence in Q4 2021.
The tragic passing of our founder and Executive Chairman, Bruce Dingwall, has - understandably - been a great personal and professional loss to everyone at Trinity, but we are determined to build on his legacy, realising the full potential of the strong position which the Group is now in. Since Bruce's passing, Jeremy Bridglalsingh has stepped up to become Chief Executive Officer and Nick Clayton has taken on the role of Non-Executive Chairman. Jeremy leads a highly capable, six strong Executive Management Team, having been expanded in July 2021 with the appointment of Denva Seepersad as Finance Director and Dr Ryan Ramsook as Executive Manager, Sub Surface. The recent appointment of Derek Hudson to the Board brings strong industry relationships, strategic insight and significant knowledge and understanding of the oil and gas business in Trinidad. The proposed establishment of a Technical Committee, chaired by Non-Executive Director, James Menzies, will further boost the commercial and technical expertise and support available to the Board and Executive Management Team. Furthermore, the completion of the Capital Reorganisation in July 2021 clears the way for future dividend payments and/or share buy backs when deemed appropriate.
H1 2021 Key Performance Indicators
Trinity assesses the Group's performance using both International Financial Reporting Standards ('IFRS') and the Alternative Performance Measures Guidelines ('APM') governed by the European Securities and Markets Authority ('ESMA'). 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 2021 under both the IFRS and APM basis. Higher oil price realisations more than offset the modest and expected decline in net production, leading to a 69% increase in Adjusted EBITDA to USD 10.3 million (H1 2020: USD 6.1 million) enabling the period-end cash balance to being broadly maintained at USD 19.0 million (H1 2020: USD 19.7 million) despite investment made to support future growth during the period.
We have continued to make progress since the period end, and the Company is well positioned to embark upon an exciting phase of growth underpinned by a robust, low cost, cash generative production platform.
The extension of existing licences on improved commercial terms, the broader opportunity set being developed via the 3D seismic interpretation, opportunities to act as a consolidator in Trinidad and the potential to work with partners to access more material opportunities, all provide excellent prospects for the second half and beyond.
Nicholas Clayton, Non-Executive Chairman of Trinity, commented:
'I am incredibly proud of the resilience demonstrated by the Trinity team in the wake of the sudden passing of Bruce Dingwall and the ongoing challenges to the business posed by the COVID-19 pandemic. On behalf of the entire Board, I would like to express my sincere thanks to everyone at Trinity for their continued dedication throughout this challenging period.
'The continued hard work and dedication of our team ensures continued focus on profitably scaling the business by acting as a consolidator onshore, working with partners to access larger opportunities that we could not contemplate by ourselves, and diversifying our revenue streams where opportunities exist to enhance the economics of our core asset base.
'Our strong cash generation, high margin operating model and growing reputation in the region mean that we are extremely well placed to take advantage of an attractive set of new business opportunities.
'It goes without saying that the tragic loss of Bruce last month affected everyone at Trinity, but we are determined to build on his legacy, realising the full potential of the strong position which the Group is now in.'
Source: Trinity E&P