Profitable growth and debt free
Trinity, the independent E&P company focused on Trinidad & Tobago (“T&T”), announces its unaudited interim results for the six month period ended 30th June 2018 (“H1 2018” or “the period”).
This was a transformative period for the Company, including the recommencement of drilling activity and continued production growth delivering an uplift in cash generation. In addition, the post period-end saw the Company raise gross proceeds of USD 20.0 million (“the Fundraising”) which has significantly strengthened the balance sheet, leaving it debt free and with the cash resources available to continue to profitably grow production and returns.
H1 2018 Highlights
Average realised oil price (USD/ bbl)1
Average net production (bopd)
Revenues (USD million)
Adjusted EBITDA (USD million)2
Adjusted EBITDA (USD/bbl)2
Group operating break-even (USD/bbl)3
Operating cash flow (USD million)
Capital expenditure (USD million)
Cash balance (USD million)
Pro Forma net cash / (debt) (USD million)4
- Realised price: Actual price received for crude oil sales per barrel (“bbl”)
- Adjusted EBITDA: See Note 18 for the calculation of Adjusted EBITDA. Per bbl figures refer to production over the period.
- Group operating break-even: The realised price/bbl for which the Adjusted EBITDA/bbl for the Group is equal to zero. See Appendix 1 – Trading Summary Table
- Pro Forma net cash/ (debt): See Post Funding Pro Forma Balance Sheet Extract
H1 2018 Highlights
- H1 2018 average production of 2,771 bopd (H1 2017: 2,397 bopd), representing a 16% increase over the corresponding period last year, underpinned by:
- Drilling of 2 new onshore wells. Both drilled efficiently and cost effectively on a turnkey basis.
- 7 recompletions (“RCPs”) (H1 2017: 5).
- Base production maintenance through a continuous campaign of 62 workovers (“WO”) and reactivations (H1 2017: 44).
- Balance sheet significantly strengthened from a net debt position (USD 1.2 million) at 30th June 2017 to a pro-forma net cash position of USD 19.0 million at 30th June 2018 (adjusted for the post period end Fundraise and debt repayments).
- Adjusted EBITDA increased 58% to USD 9.3 million (H1 2017: USD 5.9 million) and Adjusted EBITDA/bbl improved to USD 18.6/bbl (H1 2017: USD 13.6/bbl), with the increased oil price and production growth leveraging off a relatively fixed operating cost base.
- Maintained a group operating break-even price below USD 30.0/bbl (H1 2018: USD 28.5/bbl).
- Operating cash flow increased to USD 5.0 million (H1 2017: USD 1.7 million).
- Capital expenditure for the period amounted to USD 4.4 million (H1 2017: USD 0.7 million), comprising mainly of new wells, RCPs and continued infrastructure investment.
- Accelerated the repayment of outstanding debt to the Board of Inland Revenue (“BIR”) and Ministry of Energy and Energy Industries (“MEEI”) (together, “the T&T State Creditors") with total payment over the period of USD 3.3 million. All remaining amounts were repaid in July 2018.
Post Period End Highlights
- In July 2018 the Company raised gross proceeds of USD 20.0 million through the Fundraising:
- USD 6.4 million of the Fundraising comprised non-cash rollover by holders of 88% of the Convertible Loan Notes (“CLNs”) electing to convert the value of their CLNs into new ordinary shares at the issue price.
- The Company has subsequently repaid, in full, the outstanding debt of USD 2.6 million to the T&T State Creditors as well as the remaining USD 0.9 million of CLNs which were outstanding.
- The Fundraising will enable the Company to accelerate its onshore drilling programme and production, with a planned 8-10 wells per year. The free cash flow which the Company expects to generate will enable it to self-fund new onshore drilling activity from 2020 onward while continuing double-digit annual production growth as it develops its low risk onshore assets.
- East Coast Asset Development
- The Company has continued to revise the Trintes drilling plan and rework the TGAL Field Development Plan (“FDP”), which offers a significant opportunity to deliver a step-change in production levels in the medium term.
- The Petroleum Company of Trinidad and Tobago (“Petrotrin”) Restructuring Update
- On 28th August 2018 Petrotrin announced its intention to discontinue refining operations to focus on its upstream exploration and production activities. The Company does not expect this decision to impact the ongoing Sales Agreements with Petrotrin for Trinity's crude oil production, which it anticipates will be consolidated with Petrotrin and others' output and exported as it has been on previous occasions when the refinery had been shut down.
Operational Look Ahead
- Recommencement of drilling activity
- Signed a turnkey agreement with external drilling contractor for a 6 well onshore campaign, bringing the total for 2018 to at least 8 wells. The first well was spudded in August 2018.
- The production impact of this drilling programme will be realised towards the end of Q4 2018 into Q1 2019.
- Routine production activity
- H2 2018 work programme will continue with; RCPs, routine WOs, reactivations and swabbing.
- An offshore RCP will be undertaken in the Trintes field, which will be the first offshore RCP that Trinity will be doing since assuming operatorship in 2013.
Bruce A. I. Dingwall CBE, Executive Chairman of Trinity, commented:
“With a return to new infill drilling in H1 2018 alongside a continuing programme of RCPs, WOs, swabbing and reactivation activities, Trinity was able to reset its base production at a higher level. In H2 2018, post the fundraise and the settlement of all outstanding debt, we have established a stable, well-funded platform with significant reserves and resources and an established growth trajectory which is ideally positioned to continue growing production, cash flow and shareholder value. With peer leading break-evens and plans to increase production we can grow profitability in the short-term whilst working up a further step-change from future developments.
“The acceleration of our onshore drilling programme has allowed Trinity to position itself to deliver double digit production growth year-on-year, generate significant cash flow and will facilitate self-funded new onshore drilling activity from 2020 onwards whilst selectively pursuing other value accretive opportunities.
“On behalf of the Board I must thank all our staff and our key suppliers in Trinidad for their hard work and support which has allowed Trinity to focus on profitable growth whilst maintaining a safe working environment. 2018 has been pivotal to Trinity thus far and the Board would additionally like to take this opportunity to thank existing shareholders and other stakeholders for their support and welcome new shareholders as we move forward debt free and strongly positioned to take advantage of future opportunities in the changing environment in Trinidad & Tobago"