TIDMTRIN
RNS Number : 7283L
Trinity Exploration & Production
10 September 2019
Dissemination of a Regulatory Announcement that contains inside
information according to
REGULATION (EU) No 596/2014 (MAR).
Trinity Exploration & Production plc
("Trinity" or "the Company" or "the Group")
Interim Results
Strong Cash Flows and Operating Margins
Trinity, the independent E&P company focused on Trinidad
& Tobago ("T&T"), announces its unaudited interim results
for the six month period ended 30 June 2019 ("H1 2019" or "the
period").
Trinity delivered another strong operational and financial
performance during the period with production volumes successfully
maintained and effective cost control and strong cash generation
continuing. Production averaged 3,008 bopd, a like-for-like
increase of 9% versus H1 2018 and is expected to rise in the second
half of the year ("H2 2019") following the resumption of onshore
drilling.
During the period, Trinity continued to manage its operating
costs and capital expenditures carefully. As a consequence,
unaudited H1 2019 Adjusted EBITDA increased by 20% to USD 11.2
million (H1 2018: USD 9.3 million) and the Adjusted EBITDA Margin
increased to 34.8% (H1 2018: 30.9%) despite a modest decline in the
realised oil price. Unaudited H1 2019 cash balances increased to
USD 17.8 million as at 30 June 2019 - up from USD 10.2 million at
the end of 2018 - and unaudited cash plus working capital surplus
increased to USD 22.0 million as at 30 June 2019 - up from USD 18.1
million at the end of 2018.
Production has already commenced from the first new infill well
of the H2 2019 drilling campaign with production from the second
well expected imminently. This second well is Trinity's first High
Angle Well ("HAW"), which has been successfully drilled and has
intersected net oil reservoir sandstone one and a half times the
thickness of those expected had it been drilled as a conventional
well. In addition, the third well of the H2 2019 drilling campaign
has spudded.
H1 2019 Highlights
H1 2019(1) H1 2018 % Change
Average realised oil price(2) USD/bbl 59.1 60.0 (2)
Average net production bopd 3,008 2,771 9
Revenues USD million 32.2 30.1 7
Adjusted EBITDA(3) USD million 11.2 9.3 20
Adjusted EBITDA(4) USD/bbl 20.6 18.6 11
Adjusted EBITDA margin(5) % 34.8 30.9 13
Adjusted EBITDA after SPT & PT(6) USD million 6.5 5.4 20
Group operating break-even(7) USD/bbl 26.3 28.5 (8)
Cash balance USD million 17.8 9.1 96
Cash plus working capital surplus(8) USD million 22.0 11.8 86
Notes:
1. Excludes the impact of adopting IFRS 16 for H1 2019 to
illustrate the like-for like, period-on-period comparative with H1
2018 using IAS 17. Refer to section on Adoption of IFRS 16 for
comparative representations.
2. Realised price: Actual price received for crude oil sales per barrel ("bbl").
3. Adjusted EBITDA: Operating Profit before Taxes for the
period, adjusted for Depreciation, Depletion & Amortisation
("DD&A"), non-cash share option expenses and Other Expenses
(derivative hedge instruments).
4. Adjusted EBITDA (USD/bbl): Adjusted EBITDA/ production over the period.
5. Adjusted EBITDA Margin (%): Adjusted EBITDA/Revenues.
6. Adjusted EBITDA after SPT & PT: Adjusted EBITDA less
Supplementary Petroleum Taxes and Property Taxes. H1 2018 included
a write back of USD 1.1 million relating to 2016 and 2017 PT which
has been excluded to aid period-on-period comparison.
7. Group operating break-even: The realised price/bbl where the
adjusted EBITDA/bbl for the Group is equal to zero. See Appendix 1
- Trading Summary Table.
8. See section on Cash plus working capital surplus (formerly
net cash position) for additional information.
H1 2019 Highlights
Operational
-- H1 2019 average production of 3,008 bopd (H1 2018: 2,771
bopd), representing a 9% increase over the corresponding period
last year, underpinned by:
o 5 recompletions ("RCPs") (H1 2018: 7)
o Base production maintenance through a continuous campaign of
71 workovers ("WOs") and reactivations (H1 2018: 62)
Financial
-- Opex reduced by 9% to USD 14.9/bbl (H1 2018: USD 16.5/bbl).
-- Group operating break-even decreased by 8% to USD 26.3 /bbl (H1 2018: USD 28.5/bbl)
-- Adjusted EBITDA increased 20% to USD 11.2 million (H1 2018: USD 9.3 million)
-- Adjusted EBITDA/bbl improved by 11% to USD 20.6/bbl (H1 2018:
USD 18.6/bbl) and Adjusted EBITDA Margin improved by 13% to 34.8%
(H1 2018: 30.9%)
-- Adjusted EBITDA after SPT and PT increased 20% to USD 6.5 million (H1 2018: USD 5.4 million)
-- Capital expenditure of USD 2.5 million (H1 2018: USD 4.4 million)
-- Cash plus working capital surplus at USD 22.0 million on 30
June 2019 (H1 2018: USD 11.8 million)
-- The new Onshore wells drilled benefit from lower Overriding
Royalties ("ORR") in Year 1 at 0% and Year 2 at 10%, compared with
the base ORR rates applying under the Lease Operatorship
Agreements.
Post Period End Highlights
Operational
o Onshore: First High Angle Well ("HAW") completed
-- Two wells drilled and completed and third well spudded of the H2 2019 drilling programme
o First well was spudded in July 2019 and put on production
after 21 days
o The second well drilled, Trinity's first HAW, FR 1807, was
successfully drilled to Total Depth at 3,038 ft within 14 well days
and intersected net oil reservoir sandstone one and a half times
the thickness expected had it been drilled as a conventional well
on this target. Completion permissions have been granted and the
well has been perforated with first production expected
imminently
o The third well was spudded in late August with drilling
operations expected to be completed by mid-September
o Onshore: Production Optimisation Programme
-- As part of an overall Supervisory Control and Data
Acquisition ("SCADA") approach to production optimisation onshore
and offshore Trinity and Weatherford International plc (WFTIQ)
("Weatherford") have entered a partnership onshore Trinidad:
o Piloting use of Weatherford's ForeSite(R) Production
Optimisation Production 4.0 platform (Software and Automation) in
order to maximise returns from the Company's onshore wells
o First instance where technology of this kind has been deployed
in the onshore oil producing acreage of Trinidad
o Technology has been deployed on both Progressive Cavity and
Sucker Rod Pumps
o By providing support for a broad array of production methods
and the ability to optimise an asset from well to surface facility,
it will enable Trinity to identify and prioritise production
optimisation opportunities
o If deemed successful, Trinity aims to utilise continuous
production optimisation on key wells in order to further reduce
operating costs and increase reserves and production
o Offshore: East Coast Galeota Development progressing
-- Detailed technical and commercial discussions progressing
with partner Heritage Petroleum Company Limited ("Heritage") and
technical providers
o Review of commercial terms initiated with Heritage and the
Ministry of Energy and Energy Industries ("MEEI")
o A pre-Front End Engineering Design ("pre-FEED") study was
completed on the subsea power cable, initial stability analysis
completed on a new pipeline, and initial design studies are
progressing on the platform. A pre-FEED study on onshore fluids
handling requirements to commence during September
o Environmental permit application for field development
submitted; it is expected that the relevant environmental studies
will be undertaken during H2 2019 and 2020 in order to secure the
environmental permit
Corporate
o Hedging
-- Trinity has taken advantage of the oil price strength in July
2019 to put in place a layer of hedging which is designed to
protect a portion of Group cash flows between USD 50.0 - USD
55.0/bbl thereby partially offsetting the impact of SPT whilst
retaining upside exposure to rising oil prices over the majority of
production
Hedge Floor Cap Strike Price Production Effective Date Expiry Date
USD/bbl USD/bbl USD/bbl Barrels monthly
Put Spread 50.0 55.0 N/A 12,500 01-Jul-19 31-Dec-19
3-Way Option 50.0 55.0 64.4 12,500 01-Jul-19 30-Jun-20
Operational Look Ahead
o Continued Drilling activity
-- The H2 2019 drilling campaign envisages drilling up to eight
onshore wells by the end of 2019
-- The number of wells to be drilled will be dependent on
results and prevailing market conditions
-- The results from the first HAW will be closely monitored to
enable the high grading of further HAW drilling candidates
-- Routine production activity
-- H2 2019 work programme will continue with planned RCPs,
routine WOs, reactivations and swabbing
-- Overriding focus on becoming sustainably and significantly free cash flow generative
-- Maintain low operating break-even, providing strong operational hedging
-- Further reduce opex/bbl via increased production (preserving
base production and increasing individual well production rates)
and leveraging via economies of scale, new technology applications
and well optimisations
-- Reduce capital costs of drilling new wells
-- Improve commercial terms across the asset base
Bruce Dingwall CBE, Executive Chairman of Trinity,
commented:
"The first half of the year delivered another strong performance
as Trinity continued to increase base production levels whilst
controlling costs, deriving further operating efficiencies ahead of
the recommencement of our onshore drilling programme. Importantly,
with our financial performance demonstrating the success of our
near-term strategy, we also continued to progress longer-term
objectives with regards to our offshore opportunity.
"Our strong balance sheet and robust base production mean that
we are delivering on our financial and production targets, and at
the same time, ensuring that we can take advantage of any strategic
opportunities that may arise. We remain focused on maximising
output and returns for shareholders and continue to evaluate the
best ways of protecting and enhancing those returns through prudent
treasury management, industry leading operating practices and
technical innovation. Given the strength of our business model, the
ongoing work programme and visibility afforded by our balance
sheet, we continue to face the future with confidence."
Management Interview
Watch management discuss today's results and future prospects by
clicking on the following link: http://bit.ly/TRINH1_2019
Enquiries
Trinity Exploration & Production
Bruce Dingwall, Executive Chairman
Jeremy Bridglalsingh, Chief Financial
Officer
Tracy Mackenzie, Corporate Development
Manager +44 (0)131 240 3860
SPARK Advisory Partners Limited (NOMAD
& Financial Adviser)
Mark Brady
Miriam Greenwood
Andrew Emmott +44 (0)20 3368 3550
Cenkos Securities PLC (Broker)
Joe Nally (Corporate Broking)
Neil McDonald
Derrick Lee +44 (0)20 7397 8900
Pete Lynch +44 (0)131 220 6939
Whitman Howard Limited (Equity Adviser)
Nick Lovering
Hugh Rich +44 (0)20 7659 1234
Walbrook PR Limited trinityexploration@walbrookpr.com
Nick Rome +44 (0)20 7933 8780
Competent Person's Statement
All reserves and resources related information contained in this
announcement has been reviewed and approved by Graham Stuart,
Trinity's Technical Adviser, who has 36 years of relevant global
experience in the oil industry. Mr. Stuart holds a BSC (Hons) in
Geology.
About Trinity (www.trinityexploration.com)
Trinity is an independent oil and gas exploration and production
company focused solely on Trinidad and Tobago. Trinity operates
producing and development assets both onshore and offshore, in the
shallow water West and East Coasts of Trinidad. Trinity's portfolio
includes current production, significant near-term production
growth opportunities from low risk developments and multiple
exploration prospects with the potential to deliver meaningful
reserves/resources growth. The Company operates all of its nine (9)
licences and, across all of the Group's assets, management's
estimate of 2P reserves as at the end of 2018 was 24.5 mmbbls.
Group 2C contingent resources are estimated to be 18.8 mmbbls. The
Group's overall 2P plus 2C volumes are therefore 43.3 mmbbls.
Trinity is listed on the AIM market of the London Stock Exchange
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
During H1 2019, the Company continued to build on the momentum
achieved in 2018 through the continuation of the RCP programme,
routine WOs, reactivations and swabbing, delivering 9% year-on-year
production growth. The H2 2019 activity set will include up to
eight new onshore infill wells alongside RCPs, WOs, reactivations
and swabbing activities which is expected to lead to an increase in
the base level of production going into 2020.
Onshore operations
-- H1 2019 average net production was 1,615 bopd (H1 2018: 1,530
bopd). The 6% increase was as a result of the infill wells drilled
in 2018 and continued performance from the ongoing RCPs (5) and
base maintenance WOs and reactivations (56) (H1 2018: 7 RCPs, 47
WOs and reactivations).
-- Technological strategies are being implemented using
Supervisory Control and Data Acquisition ("SCADA") approach to:
- Reduce time to detect Electrical Shut Downs ("ESDs") from
field power losses through the implementation of real time
monitoring tools to potentially limit the amount of down time on
wells
- Solution application for Sucker Rod Pumps and Progressive
Cavity Pumps (support predicative analysis through real time
surveillance and support well optimisation)
- Battery Station and Wells Site Tanks automation and
monitoring
-- H2 2019 planned work programme anticipates:
- Up to eight infill wells which will allow a further rebasing
of production levels
- 12 RCPs and ongoing base management via WOs and reactivations
and swabbing across all onshore fields
East Coast operations
-- H1 2019 average production was 1,208 bopd (H1 2018: 1,046
bopd). The 15% increase in production was a result of the RCP
executed in H2 2018 and the workover and reactivation campaign of 5
WOs during H1 2019 (H1 2018: 15 WOs)
-- H2 2019 work programme is targeting a second RCP offshore in
addition to the programme of routine WOs and reactivations
-- Well optimisation strategies are being implemented using the
SCADA approach to reduce current spend on real time monitoring and
data aggregation of Electrical Submersible Pumps ("ESPs")
-- Trinity continues to invest in maintaining production levels
via better power generation management, continued pump optimisation
and the review of alternative artificial lift technologies to
augment production
West Coast operations
-- H1 2019 average net production was 185 bopd (H1 2018: 195
bopd). The 5% decrease in production was the result of natural
production decline. During H1 2019 5 WOs (H1 2018: nil) were
executed to maintain base production levels
-- H2 2019 planned work programme will include WOs on key wells to maintain production levels
FINANCIAL REVIEW
Income Statement Analysis
H1 2019 H1 2018 Change
Production
Average realised oil price (USD/
bbl) 59.1 60 (1)
Average net production (bopd) 3,008 2,771 237
Statement of Comprehensive Income USD'000 USD'000 USD'000
Operating revenues 32,216 30,098 2,118
Operating expenses (excluding DD&A) (21,369) (22,741) 1,372
------------------------------------- --------------------------- -------------------- ----------------------------
Operating profit before DD&A 10,847 7,357 3,490
DD&A (5,102) (4,746) (356)
------------------------------------- --------------------------- -------------------- ----------------------------
Operating profit before SPT & PT 5,745 2,611 3,134
SPT (4,427) (3,650) (777)
PT (247) 884 (1,131)
------------------------------------- --------------------------- -------------------- ----------------------------
Operating profit before exceptional
items 1,071 (155) 1,226
Exceptional items (930) 11,616 (12,546)
------------------------------------- --------------------------- -------------------- ----------------------------
Operating profit/(loss) -
after exceptional items and SPT & PT 141 11,461 (11,320)
Finance cost (713) (1,279) 566
------------------------------------- --------------------------- -------------------- ----------------------------
Profit before Taxation (572) 10,182 (10,754)
Taxation (charge)/credit (154) 5,726 (5,880)
------------------------------------- --------------------------- -------------------- ----------------------------
(Loss)/profit after income tax (726) 15,908 (16,634)
Currency translation 95 (19) 114
------------------------------------- --------------------------- -------------------- ----------------------------
Total comprehensive (expense)/income (631) 15,889 (16,520)
Operating Revenues
Operating revenues of USD 32.2 million (H1 2018: USD 30.1
million). Increased production drove the USD 2.1 million increase
in revenue for the period despite a modestly lower realised oil
price.
Operating Expenses See Note: Adoption of IFRS 16 in relation to
Operating and G&A expenses
Operating expenses of USD (26.5) million (H1 2018: USD (27.5)
million) comprised of the following:
-- Royalties of USD (10.1) million (H1 2018: USD (10.0) million)
-- Production costs ("Opex") of USD (7.9) million (H1 2018: USD (8.3) million)
-- Depreciation, Depletion and Amortisation ("DD&A") charges
of USD (5.1) million (H1 2018: USD (4.7) million)
-- General and administrative ("G&A") expenditure of USD
(2.7) million (H1 2018: USD (2.5) million)
-- Share Option expense USD (0.5) million (H1 2018: USD (0.4) million)
-- Foreign Exchange loss USD (0.2) million (H1 2018: USD (0.0) million)
-- Other expenses nil (H1 2018: (1.6) million relate to fair
value adjustment on the oil price derivative in H1 2018)
Operating Profit Before Supplemental Petroleum Taxes ("SPT") and
Property Tax ("PT")
The operating profit before SPT and PT for the period amounted
to USD 5.7 million (H1 2018: USD 2.6 million) and was driven by
increased production and effective cost control.
SPT & PT
The Group incurred an SPT charge of USD (4.4) million in H1 2019
(H1 2018: USD (3.7) million), on account of the realised oil price
exceeding USD 50.0/bbl throughout the period. An accrual for PT of
USD (0.2) million arose for the period (H1 2018: USD 0.9 million,
comprising an accrual of H1 2018 of USD (0.2) million and a
reversal for 2016 and 2017 of USD 1.1 million).
Operating Profit Before Exceptional items
The Operating Profit Before Exceptional items for the period
amounted to USD 1.0 million (H1 2018: USD (0.2) million loss) and
was mainly driven by increased production and effective cost
control.
Exceptional items
Exceptional items charge of USD (0.9) million (H1 2018: USD
(11.6) million credit) relate to:
-- Impairment of property plant and equipment USD 0.8 million (H1 2018: nil)
-- Impairment of receivables and inventory USD 0.1 million (H1 2018: nil)
-- Fees relating to corporate restructuring and unsecured
creditor compromise USD 0.0 million (H1 2018: nil)
-- Gain on fair value of financial instrument nil (H1 2018: USD
11.6 million credit). In 2018 a revaluation of the embedded call
option associated with the Convertible Loan Notes ("CLNs") incurred
a non-cash gain. The embedded call option associated with the CLN
was revalued as at 30 June 2018 which resulted in a fair value gain
arising on the financial instrument. This gain was eliminated when
the CLNs were converted or repaid subsequent to the period end, and
as such did not appear in the 2018 full year results.
Net Finance Cost
Finance costs for the period totalled USD (0.7) million (H1
2018: USD (1.3) million), comprised of:
-- Unwinding of the discount rate on the decommissioning
provision of USD (0.6) million (H1 2018: USD (0.8) million)
-- Accrued interest on CLN- nil (H1 2018: USD (0.5) million)
-- Interest income - USD 0.1 million (H1 2018: USD 0.0 million)
-- Interest on taxes - USD (0.1) million (H1 2018: nil)
-- Interest on leases - USD (0.1) million (H1 2018: nil)
Taxation
Taxation (charge)/credit for the period was USD (0.2) million
charge (H1 2018: USD 5.7 million credit), comprised of:
-- Reduction in deferred tax assets recognised of USD (0.8) million (H1 2018: USD 5.8 million)
-- Reduction in deferred tax liability of USD 0.7 million (H1 2018: USD (0.0) million)
-- Unemployment Levy of USD (0.1) million (H1 2018: (0.1) million)
As at 30 June 2019, the Group had unrecognised tax losses of USD
234.8 million (H1 2018: 213.0 million) which have no expiry
date.
Total Comprehensive (Expense)/ Income
Total Comprehensive Expense for the period was USD (0.6) million
(H1 2018: 15.9 million income, as a result of non-cash exceptional
items).
Cash Flow Analysis
Opening Cash Balance
Trinity began the year with an initial cash balance of USD 10.2
million (2018: USD 11.8 million).
Summary of Statement of Cash Flows
H1 2019 H1 2018 FY 2018
USD'000 USD'000 USD'000
Opening cash balance 10,201 11,792 11,792
--------------------------------------------------- -------- -------- ---------
Cash movement
Net cash inflow from operating activities 10,394 4,996 5,207
Net cash outflow from Unsecured and T&T State
Creditor payments - (3,254) (5,835)
Net cash outflow from investing activities (2,541) (4,403) (12,460)
Net cash outflow from financing activities (288) - 11,497
--------------------------------------------------- -------- -------- ---------
Increase/ (decrease) in cash and cash equivalents 7,565 (2,661) (1,591)
Closing cash balance 17,766 9,131 10,201
=================================================== ======== ======== =========
Net cash inflow from operating activities
Cash inflow from operating activities was USD 10.4 million (H1
2018: USD 5.0 million).
-- Operating activities for H1 2019 resulting in an adjusted
profit before changes in working capital and tax of USD 6.4 million
(H1 2018: USD 5.7 million)
-- Changes in working capital resulted in a net increase of USD
3.9 million (H1 2018: USD (0.7) million)
-- Trade and other receivables in relation to Petroleum Company
of Trinidad and Tobago ("Petrotrin") restructuring:
- Trinity received USD 5.3 million from Petrotrin in H1 2019 for
crude oil volumes delivered for the period October to November 2018
in H1 2019
- At 30 June 2019 the outstanding balance from Petrotrin was USD
1.4 million. Post 30 June 2019 Trinity received a further USD 0.9
million which leaves a remaining outstanding balance of USD 0.5
million. Management anticipates full payment by the end of Q3
2019
-- Taxation paid USD (0.0) million (H1 2018: USD (0.1) million )
Restructuring related payments
There were no working capital cash out ows relating to the
restructuring during H1 2019 as these debts were fully repaid in H2
2018. In H1 2018: payments of USD (3.3) million were made to
T&T State Creditors (BIR and MEEI)
Cash outflow from investing activities
Trinity incurred capital expenditures mainly on production
related investment on its onshore assets and infrastructure
investment on its East Coast assets totaling USD (2.5) million in
aggregate (H1 2018: USD (4.4) million)
Net cash outflow from financing activities
Cash payment on leases of USD (0.2) million (H1 2018: nil). See
note adoption of IFRS 16
Closing Cash Balance
Trinity's cash balance at 30 June 2019 was USD 17.8 million (H1
2018: USD 9.1 million)
Adoption of IFRS 16 Leases
IFRS 16 Leases ("IFRS 16") is a new accounting standard
effective 1 January 2019. This accounting standard supersedes IAS
17 Leases and results in almost all leases being recognised on the
balance sheet, as the distinction between operating and finance
leases is removed. Under the new standard, Right of Use Assets
("ROU") and a financial liability to pay rentals are recognised.
The only exceptions are short-term (less than 12 months) and
low-value leases (less than USD 5,000).
The Group has adopted IFRS 16 from 1 January 2019, but has not
restated comparatives for the 2018 reporting period, as permitted
under the simplified transitional approach. On transition the Group
elected to apply the practical expedient to grandfather the
assessment of which transactions are leases. It applied IFRS 16
only to contracts that were previously identified as leases.
Contracts that were not identified as leases under IAS 17 and IFRIC
4 were not reassessed. Therefore, the definition of a lease under
IFRS 16 has been applied only to contracts entered into or changed
on or after 1 January 2019.
On adoption of IFRS 16, the group has recognised ROU assets and
lease liabilities in relation to Motor vehicles, Office buildings,
Staff houses and Office Equipment. The following table sets forth
the impact of the adoption of IFRS 16 on the condensed consolidated
financial statements as well as non-IFRS measures.
1. Impact on Condensed Consolidated Statement of Comprehensive Income
(a) Impact on Net Profit and Earnings per share: IFRS 16 IAS 17 Difference
USD'000 USD'000 USD'000
Expenses
Production costs ("Opex") (7,903) (8,116) 213
General & Administrative Expenses ("G&A") (2,665) (2,739) 74
Depreciation, Depletion and Amortisation (5,102) (4,867) (235)
Finance costs (713) (632) (81)
(16,383) (16,354) (29)
========= ============== =====================
Total Comprehensive (Expense)/Income for the period (631) (602) (29)
--------- -------------- ---------------------
Earnings Per Share 0.00 0.00 0.00
(b) Impact on non-IFRS measures used by the Group:
IFRS 16 IAS 17 Difference
Opex USD '000 (7,903) (8,116) 213
G&A USD '000 (2,665) (2,739) 74
--------- --------- ------------------
Total USD '000 (10,568) (10,855) 287
H1 2019 Metrics
Opex USD/bbl 14.5 14.9 (0.4)
G&A USD/bbl 4.9 5.0 (0.1)
Adjusted EBITDA USD '000 11,506 11,219 287
Adjusted EBITDA USD/bbl 21.1 20.6 0.5
Adjusted EBITDA After
SPT & PT USD '000 6,832 6,545 287
Adjusted EBITDA After
SPT & PT USD/bbl 12.5 12.0 0.5
Group operating break-even USD/bbl 25.6 26.3 (0.7)
2. Impact on Condensed Consolidated Statement of Financial Position
ROU and Lease Liabilities recognised in Balance Sheet: 1-Jan-19 Depreciation Lease Payment 30-Jun-19
USD'000 USD '000
ROU recognised
Non- current assets 1,739 (235) - 1,504
--------- ------------- -------------- ----------
1,739 (235) - 1,504
========= ============= ============== ==========
Lease Liabilities recognised as at 1 January 2019
Current lease liabilities 529 (207) 322
Non-current lease liabilities 1,210 1,210
1,739 - (207) 1504
========= ============= ============== ==========
Cash Plus Working Capital Surplus (Formerly Net Cash/Debt
Position)
Statement of Financial Position H1 2019 H1 2018
Extract
USD MM USD MM
Unaudited Unaudited
A: Current Assets
Cash and cash equivalents 17.8 9.1
Trade and other receivables 9.6 6.3
Inventories 5.3 3.9
Derivative financial asset - 11.6
Total Current Assets 32.7 30.9
====================== =====================
B: Liabilities
Non-current
Convertible loan note(1) - 7.3
Total Non-Current Liabilities(2) - 7.3
Current
Trade and other payables 10.7 9.9
Taxation payable 0.0 0.2
Derivative Financial Instrument - 1.7
Total Current Liabilities(3) 10.7 11.8
Total Liabilities 10.7 19.1
====================== =====================
(A-B): Cash plus working capital
surplus 22.0 11.8
Notes:
1. States the Face Value of the 2018 CLN and MEEI liabilities as
opposed to amortised cost stated in the Financials
2. Non-Current Liabilities excludes Lease Liabilities, Deferred
Tax Liability & Provision for other liabilities
3. Current Liabilities excludes Lease Liabilities and Provision for other liabilities
APPIX 1: TRADING SUMMARY
A summary of realised price, production, operating break-evens,
Opex and G&A expenditure metrics is set out below:
Trading Summary Table
Details H1 2019(1) H1 2018 % Change
Realised price (USD/bbl) 59.1 60.0 -2
Production (bopd)
Onshore 1,615 1,530 6
West Coast 185 195 (5)
East Coast 1,208 1,046 15
-------------------------------- ----------- -------- ---------
Group Consolidated 3,008 2,771 9
Operating break-even (USD/bbl)
Onshore 15.9 15.7 2
West Coast 33.5 24.4 37
East Coast 19.4 27.8 (30)
Group Consolidated(2) 26.3 28.5 (8)
Metrics (USD/bbl)
Opex/bbl - Onshore 11.7 11.4 3
Opex/bbl - West Coast 27.6 20.3 36
Opex/bbl - East Coast 15.4 21.5 (29)
Opex/bbl - Group Consolidated 14.9 16.5 (9)
G&A/bbl 5.0 5.0 -
Notes:
1. Metrics does not include the impact of IFRS 16 for H1 2019 so
as to illustrate the like-for like, period -on-period comparative
with H1 2018. Refer to section on Adoption of IFRS 16 Leases for
additional explanations
2. Group operating break-even: The realised price/bbl for which
the adjusted EBITDA/bbl for the Group is equal to zero.
Independent review report to Trinity Exploration &
Production Plc
Report on the Condensed Consolidated Interim Financial
Statements
Our conclusion
We have reviewed Trinity Exploration & Production Plc's
Condensed Consolidated Interim Financial Statements (the "interim
financial statements") in the interim results of Trinity
Exploration & Production Plc for the 6 month period ended 30
June 2019. Based on our review, nothing has come to our attention
that causes us to believe that the interim financial statements are
not prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the AIM Rules for
Companies.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Statement of Financial Position as at 30 June 2019;
-- the Condensed Consolidated Statement of Comprehensive Income for the period then ended;
-- the Condensed Consolidated Cashflow Statement for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the AIM Rules for Companies.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim results in
accordance with the AIM Rules for Companies which require that the
financial information must be presented and prepared in a form
consistent with that which will be adopted in the company's annual
financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the AIM
Rules for Companies and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. 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.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Aberdeen
10 September 2019
STATEMENT OF DIRECTORS' RESPONSIBILITY
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with
International Accounting Standards ("IAS") 34 as adopted by the
European Union and that the interim management report includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
-- 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
Bruce Dingwall, CBE
Executive Chairman
Trinity Exploration & Production plc
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2019
(Expressed in United States Dollars)
------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Revenues
Crude oil sales 32,205 30,085 62,578
Other income 11 13 15
------------ ------------ -------------
32,216 30,098 62,593
Operating Expenses
Royalties (10,142) (10,013) (20,390)
Production costs (7,903) (8,259) (17,754)
Depreciation, depletion and amortisation 1,7,8 (5,102) (4,746) (10,694)
General and administrative expenses (2,665) (2,510) (5,240)
Share option expense 11 (494) (369) (737)
Foreign exchange (loss)/gain (165) (4) 17
Other operating expenses -- (1,586) (1,075)
------------ ------------ -------------
(26,471) (27,487) (55,873)
------------ ------------ -------------
Operating Profit Before Supplemental
Petroleum Taxes ("SPT") and Property
Tax ('PT") 5,745 2,611 6,720
SPT (4,427) (3,650) (7,050)
PT 4 (247) 884 607
------------ ------------ -------------
Operating Profit/ (Loss) Before
Exceptional Items 1,071 (155) 277
Exceptional items 3 (930) 11,616 (2,312)
------------ ------------ -------------
Operating Profit/ (Loss) After
Exceptional Items 141 11,461 (2,035)
Net finance cost 6 (713) (1,279) (2,056)
------------ ------------
(Loss)/Profit Before Income Taxation (572) 10,182 (4,091)
Income Taxation (expense)/credit 5 (154) 5,726 (1,270)
------------ ------------ -------------
(Loss)/Profit for the period (726) 15,908 (5,361)
Other Comprehensive Income/(Expense)
Currency Translation 95 (19) 40
------------ ------------ -------------
Total Comprehensive (Expense)/Income
for the period (631) 15,889 (5,321)
============ ============ =============
Earnings per share (expressed in
dollars per share)
Basic 16 (0.00) 0.06 (0.02)
Diluted 16 (0.00) 0.04 (0.02)
Trinity Exploration & Production plc
Condensed Consolidated Statement of Financial Position
for the period ended 30 June 2019
(Expressed in United States Dollars)
--------------------------------------------------------------------------------------------
Notes As at 30 As at 30 As at 31
June 2019 June 2018 December
2018
ASSETS $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current Assets
Property, plant and equipment 7 50,112 52,552 53,599
Right-of-use assets 1 1,504 -- --
Intangible assets 8 26,082 25,708 25,757
Abandonment fund 3,124 2,185 2,979
Performance bond (Investment held
to maturity) 253 253 253
Deferred tax asset 12 5,217 9,948 5,973
------------ ------------ ----------
86,292 90,646 88,561
------------ ------------ ----------
Current Assets
Inventories 5,255 3,940 3,738
Trade and other receivables 9 9,570 6,254 13,343
Derivative financial assets -- 11,616 --
Cash and cash equivalents 17,766 9,131 10,201
------------ ------------ ----------
32,591 30,941 27,282
------------ ------------ ----------
Total Assets 118,883 121,587 115,843
============ ============ ==========
Equity
Capital and Reserves Attributable
to Equity Holders
Share capital 10 97,692 96,676 97,692
Share premium 10 139,879 125,362 139,879
Other equity -- 590 --
Share based payment reserve 11 13,784 12,922 13,290
Reverse acquisition reserve (89,268) (89,268) (89,268)
Merger reserves 75,467 75,467 75,467
Translation reserve (1,649) (1,532) (1,638)
Accumulated deficit (177,104) (155,204) (176,473)
------------ ------------ ----------
Total Equity 58,801 65,013 58,949
Non-current Liabilities
Lease liabilities 1 1,210 -- --
Convertible loan note ("CLN") -- 3,378 --
Deferred tax liability 12 4,911 2,508 5,598
Provision for other liabilities 13 42,569 38,772 41,802
------------ ------------ ----------
48,690 44,658 47,400
------------ ------------ ----------
Current Liabilities
Trade and other payables 14 10,711 9,862 9,147
Lease liabilities 1 322 -- --
Taxation payable 5 41 198 --
Derivative financial liabilities -- 1,703 --
Provision for other liabilities 13 318 153 347
------------ ------------ ----------
11,392 11,916 9,494
Total Liabilities 60,082 56,574 56,894
------------ ------------ ----------
Total Shareholders' Equity and Liabilities 118,883 121,587 115,843
============ ============ ==========
Trinity Exploration & Production plc
Condensed Consolidated Statement of Changes in Equity
for the period ended 30 June 2019
(Expressed in United States Dollars)
Share Share Other Share Reverse Merger Translation Accumulated Total
Capital Premium Equity Based Acquisition Reserve Reserve Deficit
Payment Reserve
Reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------- -------- -------- --------- ------------ --------- ------------ ------------ -------
Balance at 1
January 2018 96,676 125,362 590 12,553 (89,268) 75,467 (1,678) (171,112) 48,590
Share based
payment
charge -- -- -- 369 -- -- -- -- 369
Translation
difference -- -- -- -- -- -- 146 -- 146
Total
comprehensive
income
for the
period -- -- -- -- -- -- -- 15,908 15,908
Balance at 30
June 2018
(unaudited) 96,676 125,362 590 12,922 (89,268) 75,467 (1,532) (155,204) 65,013
======== ======== ======== ========= ============ ========= ============ ============ =======
Balance at 1
January 2019 97,692 139,879 -- 13,290 (89,268) 75,467 (1,638) (176,473) 58,949
Share based
payment
charge -- -- -- 494 -- -- -- -- 494
Translation
difference -- -- -- -- -- -- (11) -- (11)
Total
comprehensive
loss for
the period -- -- -- -- -- -- -- (631) (631)
Balance at 30
June 2019
(unaudited) 97,692 139,879 -- 13,784 (89,268) 75,467 (1,649) (177,104) 58,801
======== ======== ======== ========= ============ ========= ============ ============ =======
Trinity Exploration & Production plc
Condensed Consolidated Cashflow Statement
for the period ended 30 June 2019
(Expressed in United States Dollars)
-------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30 June to 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Activities
Profit before taxation (572) 10,182 (4,091)
Adjustments for:
Translation difference (93) (675) 330
Finance Income 78 31 --
Finance cost 6 -- 359 499
Share option expense 494 368 737
Finance cost - decommissioning provision 6 586 778 1,557
Depreciation, depletion and amortisation 1,7,8 5,102 4,746 10,694
Loss on disposal of assets 7 -- (6) (6)
Impairment of property, plant and
equipment 7 835 -- 2,561
Impairment of inventory 50 -- --
Impairment of receivables 54 -- --
Fair value zero cost collar -- 1,586 --
Gain recognised on embedded derivative -- (11,616)
Unsecured creditors claim 3 (19) -- (192)
Compromised creditor balances -- (18) --
6,515 5,735 12,089
------------ ------------ -------------
Changes In Working Capital
(Increase)/Decrease in Inventory (1,567) (163) 28
Decrease/(Increase) in Trade and other
receivables 3,687 (843) (9,513)
Increase/(Decrease) in Trade and other
payables 1,802 395 2,731
------------ ------------ -------------
Taxation paid (43) (128) (128)
------------ ------------ -------------
Net Cash Inflow From Operating Activities 10,394 4,996 5,207
Restructuring related payments
T&T State creditors (BIR and MEEI) -- (3,254) (5,835)
Investing Activities
Purchase of computer software -- -- (26)
Exploration and Evaluation Assets 8 (332) (46) (170)
Purchase of property, plant & equipment 7 (2,209) (4,357) (12,264)
Net Cash Outflow From Investing Activities (2,541) (4,403) (12,460)
------------ ------------ -------------
Financing Activities
Finance cost -- -- (94)
Cash payment on lease (ROU) (288) -- --
Issue of shares (net of costs) -- -- 12,361
Repayment of CLNs -- -- (770)
------------ ------------ -------------
Net Cash (Outflow)/Inflow From Financing
Activities (288) -- 11,497
------------ ------------ -------------
Increase/(Decrease) in Cash and Cash
Equivalents 7,565 (2,661) (1,591)
============ ============ =============
Cash And Cash Equivalents
At beginning of period 10,201 11,792 11,792
Increase/(Decrease) 7,565 (2,661) (1,591)
------------ ------------ -------------
At end of period 17,766 9,131 10,201
============ ============ =============
Trinity Exploration & Production plc
Notes to the Condensed Consolidated Financial Statements for the
period ended 30 June 2019
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 interim financial statements for the six months
ended 30 June 2019 have been prepared in accordance with IAS 34,
'Interim financial reporting', as adopted by the European Union
("EU"), on a going concern basis. The condensed interim financial
statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2018, which have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the EU.
The results for the six months ended 30 June 2019 and 30 June
2018 are unaudited 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 2018 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.
Going Concern
In making their going concern assessment, the Directors have
considered the Group's budget and cash flow forecasts taken
together with its performance during the first half of the
financial year.
During the period, the Group continued to control its operating
costs and capital expenditures carefully. As a consequence,
unaudited cash balances increased to $17.8 million as at 30 June
2019, an increase of $7.6 million compared to the cash balance at
the end of 31 December 2018 ($10.2 million), which is available to
support the recommencement of the Group's drilling campaign in H2
2019.
The Group continues to work hard on all facets of its business
by maintaining close attention to base production, growing
production through new infill drilling, progressing the TGAL
development, and being well positioned to capitalise on the
changing local market. The Group meets its day-to-day working
capital requirements through revenue generation and positive
operating cash flows. The Group's forecast and projections, taking
account of reasonable possible changes in oil price and sales
volume, show that the Group will be able to operate within the
level of its current cash resources. Should there be a decline in
the oil price, the Board believe there are a number of actions
within their control that can be effected. These include deferral
of capital expenditure and further reducing operating costs to
manageable levels. For these reasons, the Board of Directors have a
reasonable expectation that the Group has adequate resources to
continue operational existence for the foreseeable future. The
Group therefore continues to adopt the going concern basis of
preparing the interim financial statements.
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year, and corresponding interim reporting
period, except for the estimation of income tax (note 5a) and the
adoption of new and amended standards as set out below.
New and amended standards adopted by the group
A number of new or amended standards became applicable for the
current reporting period, and the Group had to change its
accounting policies as a result of adopting IFRS 16 Leases.
The impact of the adoption of the leasing standard and the new
accounting policies are disclosed in note "Changes in accounting
policies" below. The other standards did not have any impact on the
Group's accounting policies and did not require retrospective
adjustments.
Changes in accounting policies
-- Adoption of IFRS 16 Leases ("IFRS 16")
The Group adopted IFRS 16, effective 1 January 2019. This is a
new accounting standard resulting in almost all leases being
recognised on the balance sheet, as the distinction between
operating and finance leases is removed. Under the new standard, an
asset (the right to use the leased item) and a financial liability
to pay rentals are recognised. The only exceptions are short-term
(less than 12 months) and low-value leases (less than $5,000).
The Group has adopted IFRS 16 from 1 January 2019, but has not
restated comparatives for the 2018 reporting period, as permitted
under the simplified transitional approach.
On adoption of IFRS 16, the Group has recognised right of use
assets and lease liabilities, but under the practical expedient
permitted by the standard, elected not to reassess whether a
contract is, or contains a lease at the date of initial
application. Instead, for contracts entered into before the
transition date the Group relied on its assessment made applying
IAS 17 and IFRIC 4 determining whether an arrangement contains a
Lease.
a) Adjustments recognised on adoption of IFRS 16
Right of Use Assets ("ROU") and Lease Liabilities recognised in
Balance Sheet
30 June 2019 01 January
2019
$'000 $'000
ROU recognised
Non- current assets 1,504 1,739
Lease Liabilities recognised
Current lease liabilities 322 529
Non-current lease liabilities 1,210 1,210
1,504 1,739
==================== ===========
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.
i. Impact on Earnings per share
IFRS 16 IAS 17 Difference
$'000 $'000 $'000
Expenses
Production costs (7,903) (8,116) 213
General and administrative expenses (2,665) (2,739) 74
Depreciation, depletion and amortisation (5,102) (4,867) (235)
Finance cost (713) (632) (81)
--------- --------- -------------
(16,383) (16,354) (29)
--------- --------- -------------
Total Comprehensive (Expense)/Income
for the period (631) (602) (29)
--------- --------- -------------
Earnings per Share (0.00) (0.00) (0.00)
ii. Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
-- reliance on previous assessments on whether leases are onerous
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at January 2019 as short-term
leases
-- the exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application, and the
use of hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
b) The Group's leasing activities and how these are a accounted for:
The Group has lease agreements for various types of assets;
Motor vehicles, Office buildings, Staff house and Office equipment
leases are typically made for fixed terms ranging between 1-3 years
but may have extension options.
Until the 2018 financial year, leases of property, plant and
equipment were all classified as operating leases as the Group had
no finance leases. Payments made under operating leases (net of any
incentives received from the lessor) were charged to profit or loss
on a straight-line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of fixed payments (including in-substance fixed
payments), less any lease incentives receivable.
The lease payments are discounted using a 9.25% incremental
borrowing rate, being the rate that the Group believes it would
have to pay to borrow the funds necessary to obtain an asset of
similar value in a similar economic environment with similar terms
and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date
less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise of
assets value less than $5,000.
Estimates
The preparation of 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 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 Condensed Consolidated
Financial Statements for the year ended 31 December 2018.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the balance sheet.
Trade receivables
Trade receivables are amounts due from customers 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.
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.
Impairment of financial assets
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.
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.
Financial assets at fair value through profit or loss financial
assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the
short term. Derivatives are also categorised as held for trading
unless they are designated as hedges. Assets in this category are
classified as current assets if expected to be settled within 12
months, otherwise they are classified as non-current.
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 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 2018, 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. At the end of
June 2019 the Group held cash at bank of $17.8 million (2018:$10.2
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 - the Petroleum
Company of Trinidad & Tobago ("Petrotrin") Limited and, from 1
December 2018, Heritage Petroleum Company Limited ("Heritage")
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. Having reviewed past payments combined
with the credit profile of its existing trade debtors in order to
assess the potential for impairment, the Company has concluded that
this is insignificant as there has been no history of default or
disputes arising on invoiced amounts since inception and as such
the credit loss percentage is assumed to be almost zero. No
provision for doubtful accounts against these sales has been
recorded as at 30 June 2019 and 31 December 2018.
3 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 financial statements are highlighted
below.
30 June 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
Reversal of bad debt written off -- -- (205)
Unsecured creditor compromise 19 -- (70)
Impairment of property, plant and
equipment (Note 8) (835) -- 2,561
Impairment of receivables and inventory (104) -- --
Fees relating to corporate restructuring (10) -- 26
Gain on fair value of financial -- 11,616 --
instrument
Exceptional (charge)/credit (930) 11,616 2,312
======== ======== ============
-- Unsecured creditor compromise - ($0.0 million): Gain under
the creditor settlements arising from compromised balances with
suppliers.
-- Impairment on Property, Plant and Equipment - ($0.8 million):
Charge resulting from impairment losses in Onshore Assets.
-- Impairment of receivables and inventory - ($0.1 million):
Charge for impairment of debtor balance no longer recoverable and
charge resulting from impairment of inventory.
-- Fees relating to corporate restructuring - ($0.0 million):
Charge in relation to trustee fees incurred in H1 2019.
4 Property Tax ("PT")
30 June 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
PT charges (247) (216) (493)
Reversal of 2016 and 2017 charges -- 1,100 1,100
(247) 884 607
======== ======== ============
On 8 June 2018 the Property Tax Amendment Act 2018 was assented
to by the Government of Trinidad and Tobago. The Act effectively
waived the obligation to pay PT up to December 2017. The Company
continues to accrue for PT in 2019.
5 Income taxation (expense)/ credit
a. Taxation 30 June 30 June 31 December
2019 2018 2018
Current tax $'000 $'000 $'000
* Current period
Petroleum profits tax -- -- (5)
Unemployment levy (84) (62) --
Deferred tax
* Current period
Movement in asset due to tax losses (757) 5,750 1,794
Movement in liability due to accelerated
tax depreciation 650 5 (2,991)
Unwinding deferred tax on FV uplift 37 33 (68)
Income tax expense/(credit) (154) 5,726 (1,270)
======== ======== ============
Current tax: The Group's effective tax rate varies from the
statutory rate for UK companies of 19.0% (2018: 19.0%) mainly as a
result of tax losses set off against future taxable profits,
allowable and disallowable expenses.
Deferred tax: The Group has a deferred tax asset of $5.2 million
on its Condensed Consolidated Statement of Financial Position which
it expects to recover in more than 12 months based on the expected
taxable profits generated by Group companies.
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
b. Taxation payable current
Petroleum Profits Tax("PPT")/ Unemployment 41 -- --
Levy("UL")
Due to BIR (PPT,CT and UL) -- 198 --
Taxation payable 41 198 --
============= ======== ============
The $0.04 million relates to Unemployment Levy incurred for the
period.
6 Net finance cost
31 December
30 June 2019 30 June 2018 2018
$'000 $'000 $'000
Unwinding of discount on Decommissioning (586) (778) (1,557)
Interest on loans -- (390) (592)
Interest unwind on liabilities -- (142) --
Interest on taxes (125) -- --
Interest on leases (80) -- --
Interest income 78 31 93
(713) (1,279) (2,056)
============= ============= ============
7 Property, Plant and Equipment
Plant & Land & Oil &
Equipment Buildings Gas Property Other Total
$'000 $'000 $'000 $'000 $'000
----------- -------------- -------------- ------ --------------
Opening net book amount at 1
January 2019 962 1,705 50,932 -- 53,599
Additions 389 52 1,768 -- 2,209
Impairment -- -- (835) -- (835)
Depreciation, depletion and amortisation
charge for period (209) (82) (4,569) -- (4,860)
Translation difference -- -- (1) -- (1)
Closing net book amount 30 June
2019 1,142 1,675 47,295 -- 50,112
=========== ============== ============== ====== ==============
Period ended 30 June 2019
Cost 11,309 3,297 290,448 336 305,390
Accumulated depreciation, depletion,
amortisation and impairment (10,167) (1,622) (243,152) (336) (255,277)
Translation difference -- -- (1) -- (1)
Closing net book amount 30 June
2019 1,142 1,675 47,295 -- 50,112
=========== ============== ============== ====== ==============
Plant & Land & Oil &
Equipment Buildings Gas Property Other Total
$'000 $'000 $'000 $'000 $'000
----------- -------------- -------------- ------ ------------
Opening net book amount at 1
January 2018 3,767 1,726 46,957 -- 52,450
Additions 205 2 4,434 -- 4,641
Disposal -- (6) -- -- (6)
Reclassification of DDA (2,470) -- 2,470 -- --
Depreciation, depletion and amortisation
charge for period (784) (70) (3,892) -- (4,746)
Translation difference -- (1) 214 -- 213
Closing net book amount 30 June
2018 718 1,651 50,183 -- 52,552
=========== ============== ============== ====== ============
Period ended 30 June 2018
Cost 10,643 3,111 279,353 336 293,443
Accumulated depreciation, depletion,
amortisation and impairment (9,925) (1,459) (229,384) (336) (241,104)
Translation difference -- (1) 214 -- 213
----------- -------------- -------------- ------ ------------
Closing net book amount 30 June
2018 718 1,651 50,183 -- 52,552
=========== ============== ============== ====== ============
Plant & Land & Oil &
Equipment Buildings Gas Assets Other Total
$'000 $'000 $'000 $'000 $'000
----------- -------------- -------------- ------ ------------
Year ended 31 December 2018
Opening net book amount at 1
January 2018 3,767 1,726 46,957 -- 52,450
Additions 483 135 11,646 -- 12,264
Disposal -- (6) -- -- (6)
Adjustment for decommissioning
estimate -- -- 2,076 -- 2,076
Impairment -- -- (2,561) -- (2,561)
Reclassification of assets between
categories (2,470) -- 2,470 -- --
Depreciation, depletion and amortisation
charge for year (818) (150) (9,696) -- (10,664)
Translation difference -- -- 40 -- 40
----------- -------------- -------------- ------ ------------
Closing net book amount 31 December
2018 962 1,705 50,932 -- 53,599
=========== ============== ============== ====== ============
At 31 December 2018
Cost 13,391 3,245 286,172 336 303,144
Accumulated depreciation, depletion,
amortisation and impairment (12,429) (1,540) (235,280) (336) (249,585)
Translation difference -- -- 40 -- 40
----------- -------------- -------------- ------ ------------
Closing net book amount 962 1,705 50,932 -- 53,599
=========== ============== ============== ====== ============
Note: An impairment loss of $0.8 million was recognised in
respect of several Oil and Gas assets as a result of carrying value
being higher than the recoverable amount. The recoverable amount
was determine by utilising its fair value less costs of
disposal.
8 Intangible Assets
Computer Exploration Total
Software and evaluation
assets
$'000 $'000 $'000
At 1 January 2019 246 25,511 25,757
Additions -- 332 332
Amortisation (7) -- (7)
At 30 June 2019 239 25,843 26,082
---------- ---------------- -------
At 1 January 2018 250 25,341 25,591
Additions -- 46 46
Translation difference -- 71 71
At 30 June 2018 250 25,458 25,708
---------- ---------------- -------
At 1 January 2018 250 25,341 25,591
Computer software 26 -- 26
Exploration and evaluation assets -- 170 170
Amortisation (30) -- (30)
At 31 December 2018 246 25,511 25,757
========== ================ =======
Exploration and evaluation assets: related to the TGAL
exploration well and field development plan.
9 Trade and Other Receivables
30 June 30 June 31 December
2019 2018 2018
Due within one year $'000 $'000 $'000
Trade receivables - net 5,020 3,264 10,408
Prepayments 1,389 1,217 846
VAT recoverable 2,584 1,372 1,610
Other receivables 577 401 479
9,570 6,254 13,343
======== ======== ============
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 - Having reviewed past payment performance
combined with the credit rating of Petrotrin/Heritage in order to
assess the potential for impairment, the Group has concluded this
to be insignificant as there has been no history of default or
disputes arising on invoiced amounts in the past 5 years and as
such the credit loss percentage is assumed to be almost zero.
There was a delay in collecting trade receivables for October
and November 2018 amounting to $6.7 million due to the
restructuring of the Group's sole customer Petrotrin/ Heritage at
the end of December 2018. However, $5.3 million of these have been
collected with a remaining $1.4 million outstanding as at 30 June
2019.
VAT recoverable - VAT recoverable is due from the Trinidad and
Tobago Board of Inland Revenue ("T&T BIR"). In reviewing past
payment performance combined with credit rating of the T&T BIR,
the Group has concluded the ECL to be insignificant as there has
been no history of default arising on the amount collectable and
the timing of recovery is consistent with past outstanding
amounts.
10 Share capital
Number of Ordinary Share premium Total
shares shares $'000
$'000 $'000
As at 1 January 2019 384,049,246 97,692 139,879 237,571
As at 30 June 2019 384,049,246 97,692 139,879 237,571
============ ========= ============== ========
11 Share Based Payment Reserve
The share-based payments reserve is used to recognise over the
vesting period:
- The grant date fair value of options issued to employees but
not exercised
- The grant date fair value of shares issued to employees
- The grant date fair value of deferred shares granted to
employees but not yet vested
- The issue of shares held by the Employee Share Trust to
employees.
During 2019 the Group granted share-based payment arrangements
to certain of its employees and Executive Directors under the Long
Term Incentive Plan ('LTIP'). The charge in relation to these
arrangements is shown below, with further details of the new LTIP
grants following:
31 December
30 June 2019 30 June 2018 2018
$'000 $'000 $'000
At 1 January 13,290 12,553 12,553
Share based payment expense:
Long term incentive plan 494 369 737
------------- ------------- -------------
At 31 December 13,784 12,922 13,290
============= ============= =============
Long Term Incentive Plan
In January 2019 Options over 2,824,000 ordinary shares and in
May 2019 Options over 3,832,824 ordinary shares were granted under
the LTIP in accordance with the policy announced to the market on
25 August 2017. The LTIP awards are designed to provide long-term
incentives for Senior Managers and Executive Directors to deliver
long-term shareholder returns. Under the plan, participants were
granted options which only vest if certain performance standards
are met. Participation in the plan is at the Board's discretion and
no individual has a contractual right to participate in the plan or
to receive any guaranteed benefits.
The LTIP Awards are subject to the achievement of Relative Total
Shareholder Return ("TSR") performance targets measured over a
three-year performance period ending on 1 January 2021 and 31
December 2021 respectively. TSR is the increase in share price plus
the value of any dividends paid over a period of time and captures
the full return shareholders see on an investment. Relative TSR is
the comparison of these returns against peer companies over a set
period of time.
The January 2019 LTIP awards will vest on 1 January 2021, while
the May 2019 awards will vest on 2 January 2022 subject to meeting
the performance criteria set out in the table below and continued
employment with the Company. The Options are exercisable at nil
cost by the participants.
Performance targets January 2019 LTIPs May 2019 LTIPs
Below the Median None of the award will None of the award will
vest vest
----------------------- -----------------------
Median (50th percentile) 30% of the maximum 30% of the maximum
award will vest award will vest
----------------------- -----------------------
Between Median and Straight Line basis Straight Line basis
Upper Quartile between these points between these points
----------------------- -----------------------
Upper Quartile (75%) 100% of the maximum 100% of the maximum
award will vest award will vest
----------------------- -----------------------
Above the Upper Quartile 100% of the maximum 100% of the maximum
award will vest award will vest
----------------------- -----------------------
The total fair value at grant date of the 2019 LTIP awards was
$0.9 million and this will be pro-rated and expensed over the
vesting period. The fair value at grant date was determined using a
Monte Carlo simulation model that takes into account the exercise
price, the term of the option, the share price at grant date and
expected price volatility of the underlying share, the expected
dividend yield, the risk free interest rate for the term of the
option and the correlations and volatilities of the peer group
companies. The model inputs for the 2019 LTIP awards granted during
the period ended 30 June 2019 included:
January 2019 May 2019 LTIPs
LTIPs
Grant Dates 2 January 2019 9 May 2019
Share price at grant dates GBp16.77 GBp14.66
Exercise price GBP0.00 GBP0.00
Expected volatility 113.9% 113.9%
Risk-free interest rates 0.73% 0.73%
Expected dividend yields 0% 0%
Vesting dates 1 January 2021 2 January
2022
12 Deferred Income Taxation
The analysis of deferred income taxes is as follows:
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
Deferred tax assets:
-Deferred tax assets to be recovered
in more than 12 months (5,217) (9,948) (5,973)
-Deferred tax assets to be recovered
in less than 12 months -- -- --
Deferred tax liabilities:
-Deferred tax liabilities to be
settled in more than 12 months 4,911 2,508 5,598
Net deferred tax (assets)/liability (306) (7,440) (375)
============= ========== ============
The movement on the deferred income tax is as follows:
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
------------- -------- ------------
At beginning of year (375) (1,641) (1,641)
Movement for the year 106 (5,799) 1,334
Unwinding of deferred tax on fair
value uplift (37) -- (68)
Net deferred tax (asset)/liability (306) (7,440) (375)
============= ======== ============
The deferred tax balances are analysed below:
1 January Movement 30 June Movement 31 December Movement 30 June
2018 2018 2018 2019
$'000 $'000 $'000 $'000 $'000 $'000 $'000
----------- ---------- ----------- --------- ------------ ---------- -----------
Deferred tax
assets
Acquisition (33,436) -- (33,436) -- (33,436) (33,436)
Tax losses
recognised (34,293) (5,760) (40,053) 3,966 (36,087) (1,195) (37,282)
Tax losses
derecognised 63,550 (9) 63,541 9 63,550 1,951 65,501
----------- ---------- ----------- --------- ------------ ---------- -----------
(4,179) (5,769) (9,948) 3,975 (5,973) 756 (5,217)
=========== ========== =========== ========= ============ ========== ===========
Deferred tax 1 January Movement 30 June Movement 31 December Movement 30 June
liabilities 2018 2018 2018 2019
Accelerated
tax depreciation 14,043 -- 14,043 3,127 17,170 (651) 16,619
Non-current
asset impairment (33,214) -- (33,214) -- (33,214) -- (33,214)
Acquisitions 19,580 -- 19,580 -- 19,580 -- 19,580
Fair value
uplift 2,129 (30) 2,099 (37) 2,062 (36) 2,025
----------- ---------- ----------- --------- ------------ ---------- -------------
2,538 (30) 2,508 3,090 5,598 (687) 4,911
=========== ========== =========== ========= ============ ========== =============
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 is probable. The Group
recognises deferred tax assets over a 3 year outlook which is
consistent with prior periods. Deferred tax assets of $0.8 million
have been de-recognised (2018: $1.8 million was recognised).
Deferred tax liabilities have reduced by $0.7 million (2018: $3.0
million increase) based on the carrying values of property, plant
and equipment and intangible assets which gave rise to the
temporary differences. The Group has unrecognised tax losses
amounting to $234.8 million which have no expiry date (2018: $233.3
million).
Deferred tax assets and liabilities can only be offset in the
Statement of Financial Position 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).
13 Provisions and Other Liabilities
Non-Current: Decommissioning Total
cost
$'000 $'000
6 months ended 30 June 2019
Opening amount as at 1 January
2019 41,802 41,802
Unwinding of discount 586 586
Decommissioning provision -- --
Translation differences 181 181
------------------ -----------
Closing balance as at 30
June 2019 42,569 42,569
================== ===========
6 months ended 30 June 2018
Opening amount as at 1 January
2018 37,151 37,151
Unwinding of discount 778 1,062
Decommissioning provision 739 455
Translation differences 104 104
------------------ -----------
Closing balance as at 30
June 2018 38,772 38,772
================== ===========
Year ended 31 December 2018
Opening amount as at 1 January
2018 37,151 37,151
Increase in provision for
new wells 1,164 1,164
Unwinding of discount 1,557 1,557
Revision to estimates 867 867
Decommissioning provision 1,074 1,074
Translation differences (11) (11)
------------------ -----------
Closing balance at 31 December
2018 41,802 41,802
================== ===========
Closure of
Current: Litigation claims pits Total
$'000 $'000 $'000
6 months ended 30 June 2019
Opening amount as at 1 January
2019 115 232 347
Litigation claims settled (29) -- (29)
Closing balance as at 30
June 2019 86 232 318
================== =========== ======
6 months ended 30 June 2018
Opening amount as at 1 January
2018 115 -- 115
Provision for litigation
claims 6 -- 6
Litigation claims settled (38) -- (38)
Provision for drill pit
closure -- 70 70
Closing balance as at 30
June 2018 83 70 153
================== =========== ======
Year ended 31 December 2018
Opening amount as at 1 January
2018 115 -- 115
Increase in provision -- 232 232
Closing balance at 31 December
2018 115 232 347
================== =========== ======
14 Trade and Other Payables
30 June 30 June 2018 31 December
2019 2018
$'000 $'000 $'000
Current:
Trade payables 2,009 1,085 3,076
Accruals 3,548 3,009 3,454
VAT payable -- 170 --
Other payables 951 783 701
SPT & PT 4,203 2,436 1,916
Due to BIR Interest on taxes(1) -- 1,749 --
Due to MEEI(2) -- 630 --
10,711 9,862 9,147
======== ============= ============
Notes 2018:
1. Due to the BIR is interest on taxes totaling $1.7 million.
These were fully repaid by year end 2018
2. Financial liabilities due to the MEEI of $2.1 million were
substantially modified based on the new terms of repayment. This
transaction was accounted for as an extinguishment of the original
financial liability and the recognition of a new financial
liability of $1.9 million based on its fair value. In 2018 $0.3
million was repaid with a nominal value of $0.6 million outstanding
at 30(th) June 2018 and fully repaid by year end 2018
15 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 and PT for the period, adjusted for depreciation,
depletion and amortisation, share option expenses, foreign exchange
loss/(gain) and the impact of derivative hedge instruments (other
expenses).
The Group presents Adjusted EBITDA as it is used in assessing
the underlying performance of the Group's business by excluding
items not considered by management to reflect the underlying
performance of the Group.
Adjusted EBITDA is calculated as follows:
6 months 6 months Year ended
to 30 June to 30 June December
2019 2018 2018
$'000 $'000 $'000
----------------- ----------------- ----------------
Operating Profit Before SPT & PT 5,745 2,611 6,720
Depreciation, depletion and amortisation 5,102 4,746 10,694
Share option expenses 494 369 737
Loss on oil derivative hedge instruments -- 1,586 1,075
Foreign exchange loss/ (gain) 165 4 (17)
----------------- ----------------- ----------------
Adjusted EBITDA 11,506 9,316 19,209
$'000 $'000 $'000
----------------- ----------------- ----------------
Weighted average ordinary shares
outstanding - basic 384,049 282,400 330,579
Weighted average ordinary shares
outstanding - diluted 416,123 400,708 355,995
$ $ $
Adjusted EBITDA per share - basic 0.030 0.033 0.058
Adjusted EBITDA per share - diluted 0.028 0.023 0.054
Adjusted EBITDA after the impact of SPT and PT is calculated as
follows:
6 months 6 months Year ended
to 30 June to 30 June December
2019 2018 2018
$'000 $'000 $'000
----------------- ----------------- ----------------
Adjusted EBITDA 11,506 9,316 19,209
SPT (4,427) (3,650) (7,050)
PT(1) (247) (216) (493)
----------------- ----------------- ----------------
Adjusted EBITDA after SPT and PT 6,832 5,450 11,666
$'000 $'000 $'000
----------------- ----------------- ----------------
Weighted average ordinary shares
outstanding - basic 384,049 282,400 330,579
Weighted average ordinary shares
outstanding - diluted 416,123 400,708 355,995
$ $ $
Adjusted EBITDA per share - basic 0.018 0.019 0.035
Adjusted EBITDA per share - diluted 0.016 0.014 0.033
(1 PT - 30 June and Year ended December 2018 excludes the
reversal of 2016 and 2017 waiver of $1.1 million)
16 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.
Weighted Total Earnings Exceptional Adjusted Adjusted
Average Comprehensive Per Share Items $ Comprehensive Earnings
Number (Expense)/ $ Income/ (Expense) Per Share
Of Shares Income For For The Period $
'000 The Period $'000(1)
$'000
Period ended 30 June 2019
Basic 384,049 (631) (0.00) 930 299 0.00
Diluted 384,049 (631) (0.00) 930 299 0.00
Period ended 30 June 2018
Basic 282,400 15,889 0.06 (11,616) 4,273 0.02
Diluted 400,708 15,889 0.04 (11,616) 4,273 0.01
Year ended 31 December 2018
Basic 330,579 (5,321) (0.02) 2,312 (3,009) (0.01)
Diluted 330,579 (5,321) (0.02) 2,312 (3,009) (0.01)
1 Adjusted Comprehensive income - Total Comprehensive
(Expense)/Income before Exceptional items
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 comprising 32,072,822 are
considered potential ordinary shares. Share options of 1,975,084
are considered potential ordinary shares and 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 during period ended 30 June 2019 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.
17 Contingent Liabilities
i) The farm-out agreement for the Tabaquite Block (held by
Coastline International Inc.) has expired. The Coastline entity had
a sub licence (farm out) with Petrotrin for the Tabaquite Block in
relation to Petroleum operating activities. The last sub licence
agreement dated March 2000 had various renewal options which
expired on 28 February 2010. The terms of a renewed sub licence
have been agreed with Heritage but the agreement has not been
executed pending renewal of the exploration and production head
licence between Heritage and the Government of the Republic of
Trinidad and Tobago. There may be additional liabilities arising
when a new agreement is finalised, but these cannot be presently
quantified until a new agreement is available.
ii) Parent company guarantee. A Letter of Guarantee has been
established over the Point Ligoure, Guapo Bay & Brighton
("PGB") Block where a subsidiary of Trinity is obliged to carry out
a Minimum Work Programme to the value of $8.4 million. The
guarantee shall be reduced at the end of each twelve month period
upon presentation of all technical data and results of the Minimum
Work Programme performed.
iii) On 3 June 2017 a performance bond was established by the
Group's Lease Operatorship Assets ("LOA"). A performance bond in
the form of a cash deposit of $0.3 million in the name of the
beneficiary Petrotrin/ Heritage was established for due and
punctual observance of the matters under the LOA effective until 31
December 2020.
18 Events after the Reporting Period
-- Subsequent to the period end in the month of July 2019 the
Company put in certain oil price derivatives which are intended to
help mitigate the impact of SPT on its cash flows. The derivatives
comprise of the following.
- Put spread with a WTI price floor of $50.0/bbl and a cap of
$55.0/bbl for 12,500 bbls per month over the period from 1 July
2019 to 31 December 2019.
- 3 way option with a WTI price floor of $ 50.0/bbl and a cap of
$55.0/bbl and with a call strike price of $ 64.4/bbl for 12,500
bbls per month over the period from 1 July 2019 to 30 June
2020.
-- At the end of June 2019 Trinity had $1.4 million outstanding
from Petrotrin in relation to crude oil receivables relating to
October and November 2018. Subsequent to 30 June 2019 $0.9 million
of the outstanding amount has been received by Trinity, with
remaining balance of $0.5 million expected to be repaid in the
coming months.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR QKLFBKKFEBBF
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