TIDMTRIN
RNS Number : 1516Q
Trinity Exploration & Production
17 October 2019
RNS ANNOUNCEMENT: The information communicated in this
announcement contains inside information for the purposes of
Article 7 of Regulation 596/2014.
Trinity Exploration & Production plc
("Trinity" or "the Group" or "the Company")
Q3 2019 Operational Update
Return to drilling, positive results from SCADA trial and
increasing base production
Trinity, the independent E&P company focused on Trinidad and
Tobago, today provides an update on its operations for the
three-month period ended 30 September 2019 ("Q3 2019" or "the
period"). During the period, Trinity continued to focus on
maintaining base production, drilling new infill wells, generating
free cash flow and protecting the business from downside risk.
Trinity has now completed four new onshore infill wells as part
of its H2 drilling programme, including the Company's first High
Angle Well ("HAW"), FR 1807, which has to date performed in line
with expectations. Two of the four new infill wells drilled to date
were brought on production during Q3 2019, with a third brought on
production subsequent to the period end. As a result, base
production has risen steadily (October average to date: 3,017 bopd)
with an expected year end exit production rate of c.3,400 bopd.
Focus on optimising and protecting base production is a
strategic company priority, including piloting the use of
Weatherford International plc's proprietary Supervisory Control and
Data Acquisition ("SCADA") platform. The two wells being trialed
with the new SCADA technology have, to date, seen material
production increases and the Company is very encouraged by the
early results of the trial.
During the period, Trinity also took advantage of a spike in oil
prices following the Saudi Arabia drone attacks to implement a
further tranche of its hedging programme which is designed to
partially mitigate the impact of Supplementary Petroleum Tax
("SPT") whilst retaining upside exposure to rising oil prices over
the majority of production,. As a result, Trinity now has a total
of 35,000 bbls per month hedged (c. 41% of Q3 2019 production).
Q3 Operational Highlights
-- Group average production volumes were 2,816 bopd for the
period, which is a 3% increase on the same period last year (Q3
2018: 2,734 bopd) but represents a 6% quarter on quarter decline
(Q2 2019: 2,996 bopd). The lower than expected Q3 2019 production
volumes was due to a combination of weather-related electrical
supply disruptions, low availability of swabbing and workover rigs
due to a bottleneck in rig certifications and higher than normal
closing stocks (sold post period end). The rig issue is being
resolved with the backlog of pending approvals beginning to
clear
-- A total of 10 recompletions ("RCPs") (Q2 2019: 3) and 25
workovers (Q2 2019: 36) were completed during the period
-- The RCP at Trintes was completed and brought on production on 30 September 2019
-- FR1807, our first HAW, has to date met our expectations.
Reservoir pressure data, as we continue to optimise the well and
draw down the downhole pressure, points to the well being able to
produce its pre-drill prognosed rate of 134 bopd once fully
optimised. We continue to monitor the well for oil, water and sand
production but to date those parameters remain stable
-- The Company commenced continuous production monitoring and
optimisation through the use of SCADA onshore via the partnership
with Weatherford International plc
o The two onshore trial wells using the SCADA system are
deployed on a progressive cavity pump well and a sucker rod pump
well, the two most common pumps used onshore. Results from both
wells to date are giving material production increases and
important new production data, in real time. The results and
learnings to date are enabling the selection of wells for a more
extensive roll out programme that is being planned for the coming
months
-- Technical and commercial discussions on Galeota with the
Ministry for Energy and Energy-Related Industries, our partner
Heritage Petroleum Company Limited and technical providers have
continued.
Strong Balance Sheet
-- Cash balance of US$15.6 million (unaudited) as at 30
September 2019 (30 June 2019: US$17.8 million)
o The reduction in cash balances is largely a function of new
drilling related investment capex in the period ahead of the
commensurate benefit in production revenues
-- Trinity has continued to implement its hedging strategy which
is designed to protect the Group's free cash flows by partially
mitigating the impact of SPT whilst retaining upside exposure to
rising oil prices over the majority of production
-- A further hedge was put in place, on attractive terms, during
the short period when oil prices spiked as a result of drone
attacks in Saudi Arabia
o 3-Way Option (12 month tenor) for 10,000 barrels per month
o Put spread of US$50.0 - US$56.0/bbl with a call strike of
US$65.5/bbl
o Total of 35,000 barrels per month now hedged (41% of Q3
production)
Post Period End Highlights
-- The third infill well in the H2 drilling campaign commenced production on 9 October
-- The fourth infill well which spudded on 30 September was
completed on 8 October and will be perforated and brought on
production in the next few days
-- The rig will move on to the fifth well location shortly,
following routine maintenance work, and the Company now expects to
complete this, and a sixth, well during Q4 2019
-- Initial Cumulative Production ("ICP") from the three new
wells that have currently commenced production has been over 50%
ahead of the pre-drill prognosis (despite still not yet including
the full impact of the ongoing HAW optimisation)
-- Strong contributions from these three new infill wells have
seen current production rising steadily (October average to date:
3,017 bopd) with an expected year end production exit rate of
c.3,400 bopd
Outlook
The focus for the remainder of the year will be on completing
and evaluating lessons learned from the H2 2019 onshore drilling
campaign, preparation for further drilling in H1 2020, the
continued monitoring of the two trial SCADA wells and the
preservation of base production. Results from the first HAW will
help determine future well locations with the Company fully focused
on growing production whilst maximising free cash flow generation.
With a low operating break-even and with new infill wells
increasing production, the Company intends to further strengthen
cash generation levels and the balance sheet.
In addition, the Company will continue to progress the Galeota
development and consider opportunities that may arise in the
changing local market with the aim of affecting a step change in
longer-term production capabilities.
Bruce Dingwall CBE, Executive Chairman of Trinity,
commented:
"We continue to focus on increasing our low-cost high margin
production while developing our asset base and utilising new
technologies in order to maximise the resultant returns. The
Company is pleased with the production achieved by the three new
completed infill wells, including from our first HAW which we see
as integral to achieving our growth ambitions going forward.
"When we couple these new higher production levels, our low cost
base and the increased production rates seen on our trial digital
SCADA wells, we believe we are in a great place to move forward as
a free cash flow generating business with significant upside
potential."
Enquiries:
For further information please visit www.trinityexploration.com
or contact:
Trinity Exploration & Production plc +44 (0)131 240 3860
Bruce Dingwall CBE, Executive Chairman
Jeremy Bridglalsingh, Chief Financial Officer
Tracy Mackenzie, Corporate Development
Manager
SPARK Advisory Partners Limited (Nominated
Adviser and Financial Adviser) +44 (0)20 3368 3550
Mark Brady
Miriam Greenwood
Andrew Emmott
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) +44 (0)20 7659 1234
Nick Lovering
Hugh Rich
Walbrook PR Limited +44 (0)20 7933 8780
Nick Rome trinityexploration@walbrookpr.com
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
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 quoted on the AIM market of the London Stock Exchange
under the ticker TRIN.
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
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