TIDMTRIN
RNS Number : 9706Y
Trinity Exploration & Production
15 September 2020
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 Production, Financial Resilience and a Growing
Opportunity Set
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 2020 ("H1 2020" or "the
period"). A briefing for Analysts will be held at 13.00 (BST) today
and the Company will be hosting a presentation through the digital
platform Investor Meet Company at 16.30 (BST) this afternoon,
details of which can be found in the release below.
Bruce Dingwall CBE, Executive Chairman of Trinity,
commented:
"We are pleased with the Company's performance during the
period. Everyone is aware of the exceptional circumstances - with
COVID impacting both operational practices and the oil price.
Despite these challenges, our financial resilience, emphasis on
cost management and high operating standards have enabled the
Company to increase production and increase free cash flows,
thereby further strengthening our balance sheet and establishing
the necessary foundations for future growth both from existing and
new opportunities.
"Importantly, our efficient operating base and financial
resilience mean that there is now significant potential to increase
our scale, driving economies and thereby further improving our
operating break-evens and free cash generation. We can scale the
business from both within the portfolio and from external
opportunities and believe we are well positioned to grow
production, revenues and profitability against an improving
backdrop of a more stable and recovering oil price."
H1 2020 Results Summary
Operational
-- H1 2020 average net production of 3,282 bopd (H1 2019: 3,008
bopd), representing a 9% increase over the corresponding period
last year, underpinned by:
o Base production maintenance through a continuous campaign of
56 workovers ("WOs") and reactivations (H1 2019: 71)
o 6 recompletions ("RCPs") (H1 2019: 5)
o Improved well performance via the successful application of
Supervisory, Control and Data Acquisition (" SCADA ") with improved
quantitative and qualitative performance from the wells
o Robust COVID-19 measures taken with no significant impact to
operations and production
-- Production volumes for the remainder of 2020 will depend on
activity levels which are contingent upon the oil price and general
market conditions . However, even if the prevailing oil price
environment does not support the case for a resumption of drilling
in the near term, average net production for 2020 is still expected
to be in the range of 3,100 - 3,300 bopd (2019: 3,007 bopd )
Financial
-- Forecast free cash flow positive for 2020 at current forward curve
-- Group operating break-even decreased by 6% to USD 24.7/bbl
(H1 2019: USD 26.3/bbl) before hedging income and by 15% to USD
22.3/bbl (H1 2019: USD 26.3/bbl) after hedging income. The Company
remains on track to achieve its target operating break-even
(including hedging income) of USD 20.5/bbl for FY 2020
-- Average realisation of USD 36.3/bbl for H1 (H1 2019: USD
59.1/bbl). As a result, no Supplemental Petroleum Taxes ("SPT")
will be payable with respect to H1 2020 production (H1 2019: USD
4.4 million)
-- Opex decreased by 2% on a per barrel basis to USD 14.3/bbl
(H1 2019: USD 14.5/bbl), translating into an 8% increase to USD 8.5
million (H1 2019: USD 7.9 million) due to higher levels of
production
-- G&A reduced by 19% to USD 2.2 million (H1 2019: USD 2.7
million), representing a 26% reduction on a per barrel basis to USD
3.7/bbl (H1 2019: USD 4.9/bbl), due to cost management
initiatives
-- Cash balance of USD 19.7 million as at 30 June 2020 (31
December 2019: USD 13.8 million). In addition to the trading
results for the period, the H1 2020 cash balance reflects:
o Cash outflows for Q4 2019 SPT of USD 1.6 million, H1 2020 VAT
and Levies USD 0.6 million, as well as annual payments (such as
insurance and licence obligations) of USD 0.7 million and capex of
USD 2.7 million
o Cash inflows of USD 2.7 million (from the drawdown of the CIBC
First Caribbean working capital facility), USD 2.8 million (from
the sale of VAT Bonds) and net hedging income of USD 0.8 million
received during H1 2020
H1 2020 Highlights
H1 2020 H1 2019 % Change
Average realised oil price(1) USD/bbl 36.3 59.1 -39%
Average net production(2) bopd 3,282 3,008 9%
Revenues USD million 21.5 32.2 -33%
Operating Expenditure USD million 8.5 7.9 8%
Operating Expenditure USD/bbl 14.3 14.5 -2%
General & Administrative Expenditure USD million 2.2 2.7 -19%
General & Administrative Expenditure USD/bbl 3.7 4.9 -26%
Adjusted EBITDA(3) USD million 5.0 11.5 -57%
Adjusted EBITDA(4) USD/bbl 8.4 21.1 -60%
Adjusted EBITDA margin(5) % 23.3 35.7 -35%
Adjusted EBITDA after SPT & PT(6) USD million 4.9 6.8 -28%
Group operating break-even before
hedging(7) USD/bbl 24.7 26.3 -6%
Group operating break-even after
hedging(7) USD/bbl 22.3 26.3 -15%
Cash balance(8) USD million 19.7 17.8 11%
Notes:
1. Realised price: Actual price received for crude oil sales per barrel ("bbl")
2. Average net production: This refers to average production
attributable to Trinity per day for all operations; lease
operatorships, farm-out operations and joint ventures.
3. Adjusted EBITDA: Operating Profit before Taxes for the
period, adjusted for Depreciation, Depletion & Amortisation
("DD&A"), non-cash share option expenses, Impairment of
Financial Assets, Other Expenses (Net derivative income) and Fair
value gain on derivative financial 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
Supplemental Petroleum Taxes and Property Taxes
7. Group operating break-even before and after hedging proceeds:
The realised price/bbl where the adjusted EBITDA/bbl for the Group
is equal to zero. See Appendix 1 - Trading Summary Table
8. Cash Balances were USD 13.8 million as at 31 December 2019
Post Period End Highlights
Operational
-- Onshore & Offshore: Production Optimisation Programme
o Diverse, low risk operations across 9 licences with 328
producing wells (up 53% from 2017 average of 215 wells)
o Arrested declines and grown production, delivering an
operating and financial base primed for further growth
o Continued application of SCADA technology and wider scale
automation continues at pace as Trinity's team increasingly
incorporates the use of automation hardware and analytical
applications into its well operations processes
o This has led to improved pump run life, fewer remedial
workovers, better well up-times and hence reduced production
volatility and lower declines in base production
-- Offshore: East Coast Galeota Development progressing
o Detailed technical and commercial discussions progressing with
a leading International contractor for the offshore facilities
design
o Discussions are progressing with both Heritage Petroleum
Company Limited and The Ministry of Energy and Energy Industries
(Trinity's regulator) in moving the Galeota Block Licence renewal
process forward
o The Environmental Impact Assessment ("EIA") study commenced in
February with all dry season data collection having subsequently
been completed and wet season data collection due to commence this
month. The EIA study is due to be submitted in H1 2021
o Execution of the offshore geophysical survey is anticipated in
Q3 2020. The data collected from this survey will be used for both
the EIA models and pipeline engineering
o Progressing the development of static and dynamic reservoir
models with Axis Well Technologies for the development, to aid in
optimal platform and well placement for maximum reserves recovery
from the minimum number of wells
Financial
-- Hedging
o Trinity aims to protect a portion of its cash flows on a
rolling basis against a substantial decrease in oil prices. While
historic instruments were implemented primarily to hedge against
SPT, the more recently purchased instruments aim to protect against
oil prices declining below USD 30/bbl
o These financial hedging instruments support Trinity's
effective operational hedging strategy, ensuring that it should
continue to operate at better than break-even in all but the most
extreme circumstances
-- Potential SPT Reform
o On the 10 August 2020 the Peoples National Movement ("PNM")
was re-elected into office with a manifesto commitment to reform
the regressive SPT. The PNM proposed, in the first instance, to
increase the threshold for the imposition of SPT for small onshore
oil operators to USD 75/bbl (from USD 50.01/bbl) for the fiscal
years 2021 and 2022
o The forthcoming budget on 5 October 2020 is an opportunity for
the PNM to confirm this increase, and to provide much needed
clarity on their intentions to reform SPT to encourage greater
investment in the T&T oil and gas sector
Operational & Strategic Look Ahead
-- Pursuing Scale
o Broad reserves and production base together with an extensive
development pipeline. When combined with increasing use of
analytics, transition technologies and automation, provides a solid
base for continued organic growth
o Reviewing acreage for new geological plays
o Financial strength compared to many of its peers, where
break-evens are higher and finances are potentially more
constrained, means that Trinity is well placed to take advantage of
commercial opportunities as and when they arise. Asset acquisitions
and partnerships offer the potential to increase scale, drive
economies and thereby improve operating break-evens and cash
generation to further enhance shareholder value
o Memorandum of Understanding (MoU) signed with both a Large
International Operator and a Large International Contractor on new
business initiatives
o Submitted Expressions of Interest ("EOI's") alongside Large
Consortium partner on two new opportunities of scale in
Trinidad
-- Production activity focused on maintaining a robust production base
o H2 2020 COVID-19 measures have been stepped up and continue to
be monitored
o H2 2020 work programme will continue with planned RCPs,
routine WOs, reactivations, swabbing and increased automation
applications (from the reservoir to the well bore to surface
facilities)
-- Overriding focus remains on becoming sustainably and significantly free cash flow generative
o Maintain low operating break-even, providing strong
operational hedging
o Enhanced by targeted financial hedging
o 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
o Improve commercial terms across the asset base
Analyst Briefing:
A briefing for Analysts will be held at 13.00 (BST) today via
web conference. Analysts wishing to join should contact
trinityexploration@walbrookpr.com for details.
Investor Presentation:
The Company will be hosting a presentation through the digital
platform Investor Meet Company at 16.30 (BST) this afternoon.
Investors can sign up to Investor Meet Company for free and add to
meet Trinity Exploration via the following link
https://investormeetcompany.com/trinity-exploration-production-plc/register-investor?arc=67fadd57-d5fe-4c5b-bf17-22467883feaa
.
Enquiries
Trinity Exploration & Production
Bruce Dingwall, Executive Chairman
Jeremy Bridglalsingh, Managing Director
Tracy Mackenzie, Corporate Development
Manager +44 (0)131 240 3860
SPARK Advisory Partners Limited (NOMAD
& Financial Adviser)
Mark Brady +44 (0)20 3368 3550
Cenkos Securities PLC (Broker)
Joe Nally (Corporate Broking) +44 (0)20 7397 8900
Neil McDonald +44 (0)131 220 6939
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 3 7 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
licences and, across all of the Group's assets, management's
estimate of 2P reserves as at the end of 2019 was 20.9 mmbbls.
Group 2C contingent resources are estimated to be 20.1 mmbbls. The
Group's overall 2P plus 2C volumes are therefore 41.1 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.
Strategy
Trinity's aim is to position itself as the leading independent
producer in T&T on the AIM market of the London Stock Exchange
("AIM"). To achieve this, Trinity's strategy is simple: to retain
the integrity of the core producing proved 2P reserves base, to
continue to grow production safely, to efficiently deliver
profitable operating returns and to prudently convert the Company's
significant 2C resources to 2P reserves and future inventory.
In delivering on its strategy, it is critical to ensure that the
Company maintains both the quality of its asset base and its
capability to monetise it. The successful execution of this
strategy will deliver sustainable cash generation throughout
reasonable oil price cycles and preserve and optimise value for
shareholders in the short, medium and longer term.
ESG Focus
Trinity measures its performance not only in terms of financial
and production delivery, but also in terms of its environmental,
social and governance performance. The Company is committed to
continue to operate all of its assets in a safe and responsible
manner, to ensure the safety of employees and to minimise the
potential risk to the environment. During 2020, the Company
continued to prioritise the Health Safety Security &
Environment ("HSSE") and the well-being of our people while
promoting safe behaviours among all stakeholders.
Complementing Trinity's commitment to delivering its production
targets safely, the Board is assiduously pursuing the Group's ESG
responsibilities to ensure that its carbon footprint is reduced.
Trinity has established its baseline for emissions since 2017 and
has been embarking on an abatement plan during 2020 to ensure that
it becomes a more efficient and cleaner business. Specific work
plans in place include the development of waste inventories and
established targets to reduce, reuse and recycle waste streams
across the Group; progression of the Green House Gases ("GHG")
Emissions Study to develop the Company's understanding of its total
emissions and subsequent targets and strategy to reduce GHG; the
identification of potential impact categories which include
Workplace, Industrial, Community and Environmental and the
beneficial impact of the increased usage of technology.
Results Overview
Despite the very difficult economic circumstances brought about
by the global COVID-19 pandemic Trinity moved quickly to put
measures in place to protect its team and its assets. Whilst
revenues have been negatively impacted by lower oil prices the
combination of growing production levels, a low operating
break-even and a technically advanced operating capability has
ensured a robust financial position. As such, the Company is in a
strong position to pursue new investment opportunities.
Trinity delivered another strong operational performance during
the period with production volumes successfully increased to
average 3,282 bopd, a like-for-like increase of 9% versus H1 2019.
Full year production guidance remains unchanged at 3,100 - 3,300
bopd.
Robust production levels combined with strict cost management
reduced its pre-hedge income operating break-even (revenues less
royalties, Opex and G&A to USD 24.7/bbl (H1 2019: USD
26.3/bbl)). After hedging income, this translates into an effective
operating break-even of USD 22.3/ bbl and the Company is well on
track to meet its target operating break-even (inclusive of hedging
income) of USD 20.5/bbl for FY 2020.
The strong production performance combined with an efficient
operating base helped facilitate strong cash generation levels with
H1 2020 cash balances having increased 43% to USD 19.7 million as
at 30 June 2020 from USD 13.8 million as at 31 December 2019 (H1
2019: USD 17.8 million).
OPERATIONAL REVIEW
The COVID-19 pandemic's impact on demand for oil, the subsequent
fall in oil prices, and the potential operating disruption to oil
and gas companies is an extremely challenging and evolving
situation. The Company's field operations have not, to date, been
negatively impacted by COVID-19, and no positive cases have arisen
to date, but the Company continues to monitor the situation and has
put in place appropriate measures and will continue to adapt as and
when required.
The Company has addressed operational requirements,
including:
-- Pre-access screening of all employees, contractors,
sub-contractors and suppliers to anticipate suspected and potential
cases
-- Increased PPE protocols to negate cross-contamination potential
-- Expanded access to testing services if needed
-- Business Continuity Planning developed for all assets to
address scenarios of any suspected and/or confirmed cases
The Group continues to preserve and grow a diversified
production, development, appraisal and exploration base. The asset
portfolio includes current production and further opportunities
from a significant number of wells within multiple fields both
onshore and offshore and so is not reliant on any one well or
field. Ensuring that it has a wide and growing suite of measures
that minimise natural decline and base production volatility whilst
growing production from new drilling is core to the Company's
strategy.
Despite the challenges being faced in the industry, the Company
continued during H1 2020 with its RCP programme, routine WOs,
reactivations, swabbing and increased automation, delivering 9%
comparative period-on-period production growth. The H2 2020
activity set is expected to lead to continued strong production
levels going into 2021.
Onshore operations
-- H1 2020 average net production was 1,815 bopd (H1 2019: 1,615
bopd). The 12% increase was as a result of the infill wells drilled
in 2019 and continued performance from the ongoing RCPs (6) and
base maintenance WOs and reactivations (49) (H1 2019: 5 RCPs, 71
WOs and reactivations)
-- Technological strategies are being implemented using SCADA to:
o Provide a solution application for Sucker Rod Pumps and
Progressive Cavity Pumps (support predicative analysis through real
time surveillance and support well optimisation)
o Reduce time to detect Electrical Shut Downs ("ESDs") from
field power losses through the implementation of r eal time
monitoring tools to potentially limit the amount of down time on
wells
-- H2 2020 planned work programme anticipates:
o 10 RCPs and ongoing base management via WOs, reactivations and
swabbing across all onshore fields
East Coast operations
-- H1 2020 average net production was 1,225 bopd (H1 2019: 1,208
bopd). The maintenance of production levels was a result of the
continued focus on preserving base production including the WO and
reactivation campaign of 7 WOs during H1 2020 (H1 2019: 5 WOs)
-- 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
-- Well optimisation strategies are being further implemented
using the SCADA approach to reduce current spend on real time
monitoring and data aggregation of Electrical Submersible Pumps
("ESPs")
-- H2 2020 work programme to consist of routine WOs and reactivations
West Coast operations
-- H1 2020 average net production was 242 bopd (H1 2019: 185
bopd). The 31% increase in production was the result of a greater
focus on preserving base production including ongoing swabbing and
optimisation in the field. During H1 2020 no WOs (H1 2019: 5 WOs)
were executed
-- H2 2020 planned work programme is expected to include 4 WOs and 2 RCPs
FINANCIAL REVIEW
Income Statement Analysis
H1 2020 H1 2019 Change
Production
Average realised oil price (USD/bbl) 36.3 59.1 (22.8)
Average net production (bopd) 3,282 3,008 274
Statement of Comprehensive Income USD'000 USD'000 USD'000
Operating revenues 21,531 32,216 (10,685)
Operating expenses (excluding DD&A) (15,318) (21,369) 6,051
------------------------------------------- --------- --------- ---------
Operating profit before DD&A 6,213 10,847 (4,634)
DD&A (4,362) (5,102) 740
------------------------------------------- --------- --------- ---------
Operating profit before SPT & PT 1,851 5,745 (3,894)
SPT 153 (4,427) 4,580
PT (266) (247) (19)
------------------------------------------- --------- --------- ---------
Operating profit before exceptional items 1,738 1,071 667
Exceptional items (97) (930) 833
------------------------------------------- --------- --------- ---------
Operating profit/(loss) after exceptional
items and SPT & PT 1,641 141 1,500
Finance cost (699) (713) 14
------------------------------------------- --------- --------- ---------
Profit/(loss) before taxation 942 (572) 1,514
Taxation charge (2,573) (154) (2,419)
------------------------------------------- --------- --------- ---------
Loss after income tax (1,631) (726) (905)
Currency translation (3) 95 (98)
------------------------------------------- --------- --------- ---------
Total comprehensive (expense)/income (1,634) (631) (1,003)
Operating Revenues
Operating revenues of USD 21.5 million (H1 2019: USD 32.2
million) decreased despite an increase in production volumes with a
lower realised oil price driving the USD 10.7 million decrease in
revenue for the period .
Operating Expenses
Operating expenses of USD (19.7) million (H1 2019: USD (26.5)
million) comprised:
-- Royalties of USD (5.8) million (H1 2019: USD (10.1) million),
due to lower oil prices realised
-- P roduction costs ("Opex") of USD (8.5) million (H1 2019: USD
(7.9) million), due to an increase in manpower to support
production related initiatives in H1 2020
-- Depreciation, Depletion and Amortisation ("DD&A") charges
of USD (4.4) million (H1 2019: USD (5.1) million)
-- G&A expenditure of USD (2.2) million (H1 2019: USD (2.7)
million) due to cost management initiatives in response to the low
oil price environment
-- Impairment of financial assets of USD (0.4) million (H1 2019:
nil), due to COVID-19 impact on oil prices
-- Share option expense USD (0.4) million (H1 2019: USD (0.5) million)
-- Foreign exchange loss USD (0.1) million (H1 2019: USD (0.2) million)
-- Other operating income USD 1.1 million (H1 2019: USD (0.0)
million) comprising the net income from the crude oil derivatives
in H1 2020
-- Fair value gain on derivative financial instruments USD 1.0
million (H1 2019: USD 0.0 million)
Operating Profit Before Supplemental Petroleum Taxes ("SPT") and
Property Tax ("PT")
The operating profit before SPT and PT for the period amounted
to USD 1.9 million (H1 2019: USD 5.7 million) and was primarily due
to lower operating revenues resulting from the lower oil price.
SPT & PT
The Group did not incur SPT charges in H1 2020 (H1 2019: USD
(4.4) million), on account of the realised oil price being below
USD 50.0/bbl throughout the period. The credit of USD 0.2 million
in H1 2020 arose as a result of a surplus Investment Tax Credit
from the prior year being refunded. An accrual for PT of USD (0.3)
million arose for the period (H1 2019: USD (0.2) million).
Operating Profit Before Exceptional items
The Operating Profit Before Exceptional items for the period
amounted to USD 1.7 million (H1 2019: USD 1.1 million profit) and
was mainly driven by increased production and effective cost
management despite significantly lower oil prices and revenues.
Exceptional items
Exceptional items charge of USD (0.1) million (H1 2019: USD
(0.9) million charge) relate to:
-- Impairment loss on property plant and equipment USD (0.2) million (H1 2019: USD 0.8 million)
-- Impairment reversal on equipment USD 0.1 million (H1 2019: nil)
-- Corporate structuring advice USD (0.1) million (H1 2019: USD 0.1 million)
Net Finance Cost
Finance costs for the period totaled USD (0.7) million (H1 2019:
USD (0.7) million), comprised of:
-- Unwinding of the discount rate on the decommissioning
provision of USD (0.6) million (H1 2019: USD (0.6) million)
-- Interest income - USD 0.0 million (H1 2019: USD 0.1 million)
-- Interest on bank overdraft - USD (0.0) million (H1 2019: nil)
-- Interest on leases - USD (0.1) million (H1 2019: USD (0.1) million)
Taxation
Taxation charge for the period was USD (2.6) million (H1 2019:
USD (0.2) million), comprised of:
-- Reduction in deferred tax assets of USD (3.2) million (H1
2019: USD (0.8) million), due to impact of COVID-19 on oil
prices
-- Reduction in deferred tax liability of USD 0.6 million (H1 2019: USD 0.7 million)
-- Unemployment Levy of USD 0.0 million (H1 2019: (0.1) million)
As at 30 June 2020, the Group had unrecognised tax losses of USD
226.3 million (H1 2019: 234.8 million) which have no expiry
date.
Total Comprehensive (Expense)/ Income
Total Comprehensive Expense for the period was USD (1.6) million
(H1 2019: USD (0.6) million) as a result of non-cash deferred
taxation movements.
Cash Flow Analysis
Opening Cash Balance
Trinity began the year with an initial cash balance of USD 13.8
million (2019: USD 10.2 million).
Summary of Statement of Cash Flows
H1 2020 H1 2019
USD'000 USD'000
Opening cash balance 13,810 10,201
-------------------------------------------- ---------------- -----------------
Cash movement
Cash inflow from operating activities 5,853 6,515
Changes in working capital 330 3,922
Income taxation paid (86) (43)
-------------------------------------------- ---------------- -----------------
Net cash inflow from operating activities 6,097 10,394
Net cash outflow from investing activities (2,667) (2,541)
Net cash in flow/(outflow) from financing
activities 2,439 (288)
-------------------------------------------- ---------------- -----------------
Increase in cash and cash equivalents 5,869 7,565
Closing cash balance 19,679 17,766
============================================ ================ =================
Net cash inflow from operating activities
Net cash inflow from operating activities was USD 6.1 million
(H1 2019: USD 10.0 million):
-- Operating activities for H1 2020 resulting in an adjusted
profit before changes in working capital and income taxes of USD
5.9 million (H1 2019: USD 6.5 million)
-- Changes in working capital resulted in a net increase of USD
0.3 million (H1 2019: increase of USD 3.9 million)
-- Trade and other receivables in relation to Petroleum Company
of Trinidad and Tobago ("Petrotrin") restructuring:
- Trinity received USD 0.1 million from Petrotrin in H1 2020 for
crude oil volumes delivered for the period October to November
2018
- At 30 June 2020 the outstanding balance from Petrotrin was USD
0.4 million. Management anticipates recovery in due course
-- Income Taxation - Unemployment levy paid USD (0.1) million (H1 2019: USD (0.0) million)
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 (2.7) million in
aggregate (H1 2019: USD (2.5) million).
Net cash inflow/(outflow) from financing activities
Financing cash inflows for H1 2020 resulting primarily from the
draw-down of the bank overdraft facility of USD 2.7 million less
the cash payment on leases of USD 0.3 million (H1 2019: USD (0.3)
million).
Closing Cash Balance
Trinity's cash balance at 30 June 2020 was USD 19.7 million (31
December 2019: USD 13.8 million).
Statement of Financial Position Analysis
H1 2020 YE 2019 Change
USD'000 USD'000 USD'000
Assets:
Non-current Assets 77,425 83,030 (5,605)
Current Assets 31,977 28,375 3,602
Liabilities:
Non-Current Liabilities 49,341 49,359 (18)
Current Liabilities 10,825 11,621 (796)
Equity and Reserves:
Capital and Reserves to Equity
Holders 49,236 50,425 (1,189)
Cash plus working capital surplus 21,668 17,272 4,369
Non-current Assets
Non-current assets decreased by 7% to USD 77.4 million in H1
2020 from USD 83.0 million at YE 2019:
-- Property, plant and equipment of USD 39.7 million (YE 2019:
USD 42.4 million), with depreciation being greater than capital
expenditures during the period
-- Deferred tax asset of USD 6.1 million (YE 2019: USD 9.4
million), due to the decline in the forecast oil price as a result
of COVID-19
Current Assets
Current assets increased by 13% to USD 32.0 million in H1 2020
from USD 28.4 million at YE 2019:
-- Cash and cash equivalents increased by 43% to USD 19.7 million (YE 2019: USD 13.8 million)
-- Trade and other receivables of USD 6.2 million (YE 2019: USD 9.3 million) primarily due to:
o Trade receivables less impairment of USD 2.9 million (YE 2019:
USD 5.1 million)
o VAT recoverable of USD 1.2 million (YE 2019: 2.9 million)
o Other receivables of USD 1.0 million (YE 2019: USD 0.5
million)
-- Inventories decreased by 1% to USD 5.1 million (YE 2019: USD 5.1 million)
-- Fair value gain on derivative financial assets of USD 1.0 million (YE 2019: USD 0.1 million)
Non-current Liabilities
Non-current liabilities increased to USD 49.3 million in H1 2020
from USD 49.4 million at YE 2019, primarily due to:
-- Provision for other liabilities of USD 45.1 million (YE 2019: USD 44.3 million)
-- Deferred tax liabilities of USD 3.5 million (YE 2019: USD 4.2 million)
Current Liabilities
Current liabilities decreased by 7% to USD 10.8 million (YE
2019: USD 11.6 million) primarily due to:
-- Trade and other payables of USD 7.0 million (YE 2019: USD 10.4 million)
o Trade payables of USD 2.0 million (YE 2019: USD 2.1
million)
o Accruals of USD 3.3 million (YE 2019: USD 5.0 million)
o SPT & PT of USD 1.3 million (YE 2019: USD 2.6 million)
-- CIBC bank overdraft facility of USD 2.7 million (YE 2019: nil)
Cash plus Working Capital Surplus
Cash plus working capital surplus calculated as Current Assets
less Current Liabilities (excluding Provisions for other
liabilities) increased by 25% to USD 21.7 million (YE 2019: USD
17.3 million).
Going Concern
The Directors have adopted the going concern basis in preparing
the Financial Statements.
In making their going concern assessment, the Board have
considered the Group's, current financial position, budget and cash
flow forecast. The Directors have considered the potential impact
of the COVID-19 pandemic on the Group's operational capabilities,
liquidity and financial position over the next twelve month period
and beyond.
This going concern assessment has taken into account the current
measures being put in place by the Group to preserve cash and
reduce discretionary expenditure during a period of significantly
lower oil price environment. See Note 1 to Condensed Consolidated
Financial Statements for further details.
The cash flow forecast showed that the Group will remain in a
strong financial position for the next twelve months, and as such
be able to meet its liabilities as they fall due. Management
considers this is a reasonable base scenario which reflects the
outlook of the future oil price, current production profile and
cost savings which have already been implemented.
Based on the cash flow forecast, when combined with mitigating
actions that are within the Group's control, and having considered
the potential impact of COVID-19 pandemic together with the
Government of Trinidad and Tobago's position, the Directors
currently believe the Group can maintain sufficient liquidity and a
healthy positive cash balance, and remain in operational existence,
for at least the next twelve months.
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 2020 H1 2019 % Change
Realised price (USD/bbl) 36.3 59.1 -39%
Production (bopd)
Onshore 1,815 1,615 12%
West Coast 242 185 31%
East Coast 1,225 1,208 1%
-------------------------------- -------- -------- ---------
Group Consolidated 3,282 3,008 9%
Operating break-even (USD/bbl)
Onshore 16.5 15.9 4%
West Coast 25.6 33.5 -24%
East Coast 22.5 19.4 16%
Group Consolidated before
hedging(1) 24.7 26.3 -6%
Group Consolidated after
hedging(2) 22.3 26.3 -15%
Metrics (USD/bbl)
Opex/bbl - Onshore 12.0 11.7 3%
Opex/bbl - West Coast 21.1 27.6 -24%
Opex/bbl - East Coast 17.5 15.4 14%
Opex/bbl - Group Consolidated 14.3 14.5 -1%
G&A/bbl 3.7 4.9 -24%
Notes:
1. Group consolidated operating break-even before hedging: The
realised price/bbl for which the adjusted EBITDA/bbl exclusive of
net hedge proceeds for the Group is equal to zero
2. Group operating break-even after hedging proceeds: The
realised price/bbl where the adjusted EBITDA/bbl after including
net hedge proceeds for the Group is equal to zero
INDEPENT REVIEW REPORT TO TRINITY EXPLORATION & PRODUCTION
plc
Report on the Condensed Consolidated Interim Financial
Statements
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2020 which comprises the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Consolidated Statement of Changes in Equity and
Consolidated Cash Flow Statement.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of and has been approved
by the directors. The directors are responsible for preparing the
interim report in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
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 Financial Reporting Council 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies trading
securities on AIM.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability
BDO LLP
Chartered Accountants
London
15 September 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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 2020
(Expressed in United States Dollars)
------------------------------------------------------------------------------------------------
Notes 6 months 6 months Year ended
to 30 June to 30 June 31 December
2020 2019 2019
$'000 $'000 $'000
(unaudited) (unaudited) (audited)
Operating Revenues
Crude oil sales 21,531 32,205 63,878
Other income -- 11 14
------------ ------------ -------------
21,531 32,216 63,892
Operating Expenses
Royalties (5,798) (10,142) (20,034)
Production costs (8,509) (7,903) (16,426)
Depreciation, depletion and amortisation 8-10 (4,362) (5,102) (9,772)
General and administrative expenses (2,183) (2,665) (5,589)
Impairment of financial assets (365) -- (608)
Share option expense 13 (446) (494) (1,038)
Foreign exchange loss (138) (165) (76)
Other operating income/(expenses) 3 1,082 -- (78)
Fair value gain on derivative
financial instruments 12 1,039 -- --
------------ ------------ -------------
(19,680) (26,471) (53,621)
------------ ------------ -------------
Operating Profit Before Supplemental
Petroleum Taxes ("SPT") and Property
Tax ('PT") 1,851 5,745 10,271
SPT 153 (4,427) (7,413)
PT 5 (266) (247) (492)
------------ ------------ -------------
Operating Profit Before Exceptional
Items 1,738 1,071 2,366
Exceptional items 4 (97) (930) (15,187)
------------ ------------ -------------
Operating Profit/ (Loss) After
Exceptional Items 1,641 141 (12,821)
Finance Income 44 78 138
Finance cost 7 (743) (791) (1,372)
------------ ------------ -------------
Profit/(Loss) Before Income Taxation 942 (572) (14,055)
Income Taxation (expense)/credit 6 (2,573) (154) 4,408
------------ ------------ -------------
Loss for the period (1,631) (726) (9,647)
Other Comprehensive ((Expense)/Income)
Currency Translation (3) 95 85
------------ ------------ -------------
Total Comprehensive Expense for
the period (1,634) (631) (9,562)
============ ============ =============
Earnings per share (expressed
in dollars per share)
Basic 20 (0.00) (0.00) (0.02)
Diluted 20 (0.00) (0.00) (0.02)
Trinity Exploration & Production plc
Condensed Consolidated Statement of Financial Position
for the period ended 30 June 2020
(Expressed in United States Dollars)
----------------------------------------------------------------------------------------------------------------------
Notes As at 30 As at 30 As at 31
June 2020 June 2019 December
2019
ASSETS $'000 $'000 $'000
(unaudited) (unaudited) (audited)
Non-current Assets
Property, plant and equipment 8 39,708 50,112 42,380
Right-of-use assets 9 1,287 1,504 1,402
Intangible assets 10 26,606 26,082 26,255
Abandonment fund 3,427 3,124 3,378
Performance bond (Investment held
to maturity) 253 253 253
Deferred tax asset 15 6,144 5,217 9,362
--------------------------- ------------ ------------------------
77,425 86,292 83,030
--------------------------- ------------ ------------------------
Current Assets
Inventories 5,067 5,255 5,143
Trade and other receivables 11 6,192 9,570 9,337
Derivative financial assets 12 1,039 -- 85
Cash and cash equivalents 19,679 17,766 13,810
--------------------------- ------------ ------------------------
31,977 32,591 28,375
--------------------------- ------------ ------------------------
Total Assets 109,402 118,883 111,405
=========================== ============ ========================
Equity
Capital and Reserves Attributable
to Equity Holders
Share capital 13 97,692 97,692 97,692
Share premium 13 139,879 139,879 139,879
Share based payment reserve 14 14,773 13,784 14,328
Reverse acquisition reserve (89,268) (89,268) (89,268)
Merger reserves 75,467 75,467 75,467
Translation reserve (1,652) (1,649) (1,649)
Accumulated deficit (187,655) (177,104) (186,024)
--------------------------- ------------ ------------------------
Total Equity 49,236 58,801 50,425
Non-current Liabilities
Lease liabilities 735 1,210 841
Deferred tax liability 15 3,538 4,911 4,188
Provision for other liabilities 16 45,068 42,569 44,330
--------------------------- ------------ ------------------------
49,341 48,690 49,359
--------------------------- ------------ ------------------------
Current Liabilities
Trade and other payables 17 6,968 10,711 10,386
Bank overdraft 18 2,700 -- --
Lease liabilities 641 322 637
Taxation payable 6 -- 41 80
Provision for other liabilities 16 516 318 518
--------------------------- ------------ ------------------------
10,825 11,392 11,621
Total Liabilities 60,166 60,082 60,980
--------------------------- ------------ ------------------------
Total Shareholders' Equity and
Liabilities 109,402 118,883 111,405
=========================== ============ ========================
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 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
======== ======== ======== ======== ============ ========= ============ ============ ========
Balance at 1
January 2020 97,692 139,879 -- 14,328 (89,268) 75,467 (1,649) (186,024) 50,425
Share based
payment
charge -- -- -- 445 -- -- -- -- 445
Translation
difference -- -- -- -- -- -- (3) -- (3)
Total
comprehensive
loss for
the period -- -- -- -- -- -- -- (1,631) (1,631)
Balance at 30
June 2020
(unaudited) 97,692 139,879 -- 14,773 (89,268) 75,467 (1,652) (187,655) 49,236
======== ======== ======== ======== ============ ========= ============ ============ ========
Notes 6 months 6 months
to 30 June to 30 June
2020 2019
$'000 $'000
(unaudited) (unaudited)
Operating Activities
Profit/(Loss) before taxation 942 (572)
Adjustments for:
Translation difference 3 (93)
Finance Income (44) 78
Finance cost 7 133 80
Share option expense 446 494
Finance cost - decommissioning provision 7 610 586
Depreciation, depletion and amortisation 8-10 4,362 5,102
Impairment of property, plant and equipment 8 34 835
Impairment of inventory -- 50
Impairment of receivables 406 54
Fair value gain on Derivative Financial (1,039) --
instruments
Reversal of receivables 4 -- (19)
5,853 6,515
------------------ ------------
Changes In Working Capital
Decrease/(Increase) in Inventory 76 (1,567)
Decrease in Trade and other receivables 2,816 3,687
(Decrease)/Increase in Trade and other
payables (2,562) 1,802
330 3,922
Income taxation paid (86) (43)
------------------ ------------
Net Cash Inflow From Operating Activities 6,097 10,394
Investing Activities
Exploration and Evaluation Assets (287) (332)
Purchase of property, plant & equipment (2,380) (2,209)
Net Cash Outflow From Investing Activities (2,667) (2,541)
------------------ ------------
Financing Activities
Finance income 44 --
Finance cost (18) --
Cash payment on lease (ROU) (287) (288)
Bank overdraft 2,700 --
Net Cash Inflow/(Outflow) From Financing
Activities 2,439 (288)
------------------ ------------
Increase in Cash and Cash Equivalents 5, 869 7,565
================== ============
Cash And Cash Equivalents
At beginning of period 13,810 10,201
Effects of foreign exchange rates on cash (103) 27
Increase 5,972 7,538
------------------ ------------
At end of period 19,679 17,766
================== ============
Trinity Exploration & Production plc
Condensed Consolidated Statement of Cashflows
for the period ended 30 June 2019
(Expressed in United States Dollars)
Trinity Exploration & Production plc
Notes to the Condensed Consolidated Financial Statements for the
period ended 30 June 2020
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 Consolidated interim financial statements for
the six months ended 30 June 2020 have been prepared in accordance
with International Financial Reporting Standards ("IFRS") 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 2019, which have been prepared in accordance with IFRS
as adopted by the EU.
The results for the six months ended 30 June 2020 and 30 June
2019 have been reviewed, not audited, 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 2019 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, but included a statement of material
uncertainty by way of emphasis, in relation to going concern. The
interim report has been reviewed by the auditor.
Going Concern
In making their going concern assessment, the Board have
considered the Group's current financial position, budget and cash
flow forecast. The Directors have considered the potential impact
of the COVID-19 pandemic on the Group's operational capabilities,
liquidity and financial position over the next twelve month period
and beyond. This going concern assessment has considered the
current measures put in place by the Group to preserve cash and
reduce discretionary expenditure during a period when the Group is
adapting to a lower oil price environment.
The Group started H2 2020 with a strong operating and financial
position; H1 2020 average production of 3,282 barrels of oil per
day ("bopd"), cash in hand and at bank of $19.7 million as at 30
June 2020 (2019: $13.8 million (audited)), and crude oil hedges in
place protecting a significant proportion of near term production.
In making their going concern assessment, the Directors have
considered a cash flow forecast based on expected future oil
prices, production volumes and discretionary expenditure reductions
which could be implemented in response to oil price volatility. The
base case forecast was prepared with consideration of the
following:
-- Future oil prices assumed to be in line with the forward
curve prevailing as at June 2020, with an average realised oil
price of $41.9/bbl in the period to December 2021. The forward
price curve applied in the cash flow forecast starts at $39.4/bbl
in July 2020, increasing each month up to $45.3/bbl in December
2021;
-- Average 2020 forecast production of 3,279 bopd and average
2021 forecast to December production of 3,095 bopd, with production
being maintained by RCPs, WOs and swabbing activities and no new
drilling; and
-- The benefit of cost reduction measures across Opex, G&A
and Capex which have already been implemented by the Group.
Management considers this is a reasonable base scenario to
reflect the outlook of the future oil price, current production
profile and cost savings which have already been implemented. The
cash flow forecast showed that the Group will remain in a strong
financial position for at least the next twelve months, and as such
be able to meet its liabilities as they fall due.
Based on the cash flow forecast, when combined with mitigating
actions that are within the Group's control, and having considered
the potential impact of COVID-19 pandemic together with the
Government of Trinidad and Tobago's position, the Directors
currently believe the Group can maintain sufficient liquidity and a
healthy positive cash balance, and remain in operational existence,
for at least the next twelve months.
As a result, at the date of approval of the Condensed
Consolidated financial statements, the Directors have a reasonable
expectation that the Group has sufficient and adequate resources to
continue in existence for at least twelve months post approval of
these Condensed Consolidated financial statements and is poised for
continued growth when market conditions improve. For this reason,
the Board have concluded it is appropriate to continue to adopt the
going concern basis of accounting in the preparation of the
Condensed Consolidated financial statements.
The measures taken in H1 2020 to improve the Group's financial
position, together with the positive change in the oil price
forecast at the interim period, cause the Directors to believe that
the material uncertainty that existed at 31 December 2019 has been
removed.
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year 31 December 2019 and corresponding interim
reporting period, except for those set out in the standards
below:
- New standards and amendments effective for periods beginning
on 1 January 2020 (and 1 June 2020 for one amendment to IFRS 16)
and therefore relevant to these interim financial statements
-- IAS 1 Presentation of financial statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Disclosure Initiative - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
-- Conceptual Framework for Financial Reporting (Revised)
-- IBOR Reform and its Effects on Financial Reporting - Phase 1
Estimates
The preparation of Condensed Consolidated 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 Consolidated 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 2019.
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.
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.
Segment Information
Management have considered the requirements of IFRS 8 Operating
Segments, in regard to the determination of operating segments, and
concluded that the Group has only one significant operating segment
being the exploration and development, production and extraction of
hydrocarbons.
All revenue is generated from crude oil sales in T&T to one
customer, Heritage. All non-current assets of the Group are located
in T&T.
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.
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 Consolidated 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 2019,
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 2020 the Group held cash at bank of $19.7 million (2019:$17.8
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 -Heritage Petroleum
Company Limited.
3 Other operating income/(expenses)
30 June 30 June 31 December
2020 2019 2019
$'000 $'000 $'000
Derivative asset released (85) -- --
Purchase of hedge option (169) -- (126)
Hedge income received 1,336 -- 48
Net derivative income/(expense) 1,082 -- (78)
======== ======== ============
4 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
2020 2019 2019
$'000 $'000 $'000
Unsecured creditor compromise -- 19 --
Impairment of property, plant and
equipment (Note 8) (160) (835) (15,187)
Impairment reversal 126 -- --
Impairment of receivables and inventory -- (104) --
Fees relating to corporate restructuring
advice (63) (10) --
Exceptional (charge)/credit (97) (930) (15,187)
======== ======== ============
-- Impairment on Property, Plant and Equipment - ($0.2 million):
Charge resulting from impairment loss in FZ 2
-- Reversal of impairment - $0.1 million credit relates to
impairment reversal of pumping unit ALS 14
-- Fees relating to corporate restructuring advice - ($0.1
million): Charge in relation to professional advice on a potential
corporate restructuring
5 Property Tax ("PT")
30 June 30 June 31 December
2020 2019 2019
$'000 $'000 $'000
PT charges (266) (247) (492)
(266) (247) (492)
======== ======== ============
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. There is an
expectation that a legislative waiver for 2019 and prior might be
forthcoming, but the Company has continued to accrue for PT in
2018, 2019 and 2020.
6 Income taxation (expense)/ credit
a. Taxation 30 June 30 June 31 December
2020 2019 2019
Current tax $'000 $'000 $'000
* Current period
Petroleum profits tax -- -- --
Unemployment levy (6) (84) (390)
Deferred tax
* Current period
Movement in asset due to tax losses (3,218) (757) 3,389
Movement in liability due to accelerated
tax depreciation (note 15) 604 650 1,336
Unwinding deferred tax on FV uplift 47 37 73
Income tax expense/(credit) (2,573) (154) 4,408
======== ======== ============
Current tax: The Group's effective tax rate varies based on
jurisdiction
Tax rates: 30 June 2020 30 June 2019
$'000 $'000
Corporation Tax UK 19% 19%
Corporation Tax TT 30% 30%
Petroleum Profits Tax 50% 50%
Unemployment levy 5% 5%
Deferred tax: The Group has a deferred tax asset of $6.1 million
on its Condensed Consolidated Statement of financial position which
it expects to recover within 3 years based on the expected taxable
profits generated by Group companies.
The impact of COVID 19 on deferred tax assets, is related to the
behaviour of oil prices as a result of the pandemic. Due to the
fall in oil prices compared with the year end, there was a
reduction in the expected future taxable profits and as a result a
decrease in the deferred tax assets which are being recognised.
30 June 31 December
30 June 2020 2019 2019
$'000 $'000 $'000
b. Taxation payable current
Unemployment Levy("UL") -- 41 80
Taxation payable -- 41 80
============== ======== ============
7 Finance income
30 June 31 December
2020 30 June 2019 2019
$'000 $'000 $'000
Interest income 44 78 138
======== ============= ============
Finance costs
31 December
30 June 2020 30 June 2019 2019
$'000 $'000 $'000
Unwinding of discount on Decommissioning (610) (586) (1,198)
Interest on taxes -- (125) --
Interest on overdraft (18) -- --
Interest on leases (115) (80) (174)
------------- ------------- ------------
(743) (791) (1,372)
============= ============= ============
8 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 2020 1,141 1,652 39,587 -- 42,380
Additions/(disposal) 810 (3) 604 -- 1,411
Impairment loss -- -- (160) -- (160)
Impairment reversal (note 4) 126 -- -- -- 126
Depreciation, depletion and amortisation
charge for period (94) (70) (3,888) -- (4,052)
Translation difference -- -- 3 -- 3
Closing net book amount 30 June
2020 1,983 1,579 36,146 -- 39,708
=========== =============== ============== ====== ==============
Period ended 30 June 2020
Cost 14,696 3,353 299,483 336 317,868
Accumulated depreciation, depletion,
amortisation and impairment (12,713) (1,774) (263,340) (336) (278,163)
Translation difference -- -- 3 -- 3
Closing net book amount 30 June
2020 1,983 1,579 36,146 -- 39,708
=========== =============== ============== ====== ==============
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 Assets Other Total
$'000 $'000 $'000 $'000 $'000
----------- --------------- -------------- ------ ------------
Year ended 31 December 2019
Opening net book amount at 1
January 2019 962 1,705 50,932 -- 53,599
Additions 369 111 11,676 -- 12,156
Adjustment for decommissioning
estimate -- -- 1,031 -- 1,031
Impairment -- -- (15,187) -- (15,187)
Depreciation, depletion and amortisation
charge for year (190) (164) (8,864) -- (9,218)
Translation difference -- -- (1) -- (1)
----------- --------------- -------------- ------ ------------
Closing net book amount 31 December
2019 1,141 1,652 39,587 -- 42,380
=========== =============== ============== ====== ============
At 31 December 2019
Cost 13,760 3,356 298,879 336 316,331
Accumulated depreciation, depletion,
amortisation and impairment (12,619) (1,704) (259,291) (336) (273,950)
Translation difference -- -- (1) -- (1)
----------- --------------- -------------- ------ ------------
Closing net book amount 1,141 1,652 39,587 -- 42,380
=========== =============== ============== ====== ============
Impairment loss on Property, plant & equipment:
Management performed an impairment assessment on the Group's
property, plant and equipment as the fall in oil price resulting
from COVID-19 was viewed to be an indicator of impairment. An
impairment loss of $0.2 million was recognised in respect of FZ 2
cash generating unit as a result of its carrying value being higher
than the recoverable amount. The recoverable amount was determined
by utilising fair value less costs of disposal using the following
oil price forecast:
2020 2021 2022 2023 2024 2025
Realised price forecast 39.9 40.6 41.6 42.7 43.8 45.0
----- ------ ------ ------ ----- -----
9 Leases
(i) Amounts recognised in the Condensed Consolidated Statement of Financial Position
The Condensed Consolidated Statement of Financial Position shows
the following amounts relating to leases:
01 January
30 June 2020 30 June 2019 2020
$'000 $'000 $'000
Right-of-use assets
Non-current assets 1,287 1,504 1,402
============= ============= ===========
Lease Liabilities
Current 641 322 637
Non-current 735 1,210 841
1,376 1,532 1,478
============= ============= ===========
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.
(ii) Amounts recognised in the Condensed Consolidated Statement of Comprehensive
The Condensed Consolidated Statement of Comprehensive Income
shows the following amounts relating to leases:
30 June 2020 01 January
30 June 2019 2019
$'000 $'000 $'000
Depreciation charge of ROU
assets
Depreciation (261) (232) (477)
=================== ============= ===========
Interest expense (including
finance cost) (115) (80) (174)
=================== ============= ===========
The total cash outflow for leases in 2020 was $0.3 million
10 Intangible Assets
Computer Exploration Total
Software and evaluation
assets
$'000 $'000 $'000
At 1 January 2020 268 25,987 26,255
Additions 51 349 400
Amortisation (49) -- (49)
At 30 June 2020 270 26,336 26,606
---------- ---------------- -------
At 1 January 2019 246 25,511 25,757
Additions -- 332 332
Translation difference (7) -- (7)
At 30 June 2019 239 25,843 26,082
---------- ---------------- -------
At 1 January 2019 246 25,511 25,757
Computer software 99 -- 99
Exploration and evaluation assets -- 476 476
Amortisation (77) -- (77)
At 31 December 2019 268 25,987 26,255
========== ================ =======
Exploration and evaluation asset related to the Galeota Asset
Development
11 Trade and Other Receivables
30 June 30 June 31 December
2020 2019 2019
Due within one year $'000 $'000 $'000
Trade receivables 3,059 5,020 5,307
Less: provision for impairment of
trade receivables (1) (205) -- (225)
-------- -------- ------------
Trade receivables: net 2,854 5,020 5,082
Prepayments 1,120 1,389 859
VAT recoverable 1,191 2,584 2,932
Other receivables (1) 1,027 577 464
6,192 9,570 9,337
======== ======== ============
(1 -) (The total provision on trade and other receivables was
$0.37 million. Provision on Trade receivables $0.21 million and
provision on other receivables was $0.16 million)
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 - Amounts due from related parties are
repayable on demand and entities have the ability to repay if
called immediately.
Having reviewed past payment performance combined with the
credit rating of Heritage and Legacy Petrotrin, a Provision matrix
was completed to calculate a potential impairment on the Trade and
other receivable balances. The resultant loss rates are calibrated
based on historical credit loss experiences, then adjusted with
forward looking information. There was a slight impact on the ECL,
as the forward looking rates increased from 6% to 9%. The four
forward looking factors used in macro environmental analysis were,
inflation rates, GDP annual growth rates, US dollar exchange rates
and WTI Oil price for the period July 2020 to June 2021.
Although all Heritage sales payments have been received on a
timely basis, there are other receivable balances outstanding, as
well as the long outstanding balances owed by Petrotrin which give
rise to a potential impairment. Consequently although the Company
expects to collect all outstanding balances due, a provision was
calculated at the end of June 2020 an ECL of $0.4 million was made
against Trade and Other receivables.
12 Derivative financial assets
The following table compares the carrying amounts and fair
values of the group's financial assets and financial liabilities as
at 30 June 2020.
The group considers that the carrying amount of the following
financial assets and financial liabilities are a reasonable
approximation of their fair value:
- Trade receivables
- Trade payables
- Cash and cash equivalents
As at 30 June As at 31 December
2020 2019
$'000 $'000
Fair value on Derivative asset 1,039 85
-------------
Total 1,039 85
============= =================
Fair Value Hierarchy
The level in the fair value hierarchy within which the
derivative financial asset is categorised is determined on the
basis of the lowest level input that is significant to the fair
value measurement.
The derivative financial assets are classified in their entirety
into only one of the three levels.
The fair value hierarchy has the following level:
- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
- Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Level 3 recurring fair value measurements:
As at 30
June 2020
$'000
Opening balance 85
Derivative asset released (85)
Fair value gain on Derivative asset 1,039
Closing balance 1,039
==============
On 30 June 2020 the crude derivative contracts were valued using
a mark to market report. The report provides forward looking value
on the existing crude derivatives held at 30 June 2020. The gain in
fair value is recognised in the Condensed Consolidated Statement of
Comprehensive Income during the period.
13 Share capital
Number Number Ordinary Deferred Share Total
Ordinary of Deferred shares Shares premium
shares shares $'000 $'000 $'000 $'000
As at 1 January
2020 384,049,246 94,799,986 3,840 93,852 139,879 237,571
------------
As at 30 June
2020 384,049,246 94,799,986 3,840 93,852 139,879 237,571
============ ============= ========= ========= ========= ========
- The Company does not have a limited amount of authorised share
capital
- Within the number of shares there are 94,799,986 deferred
shares of $ 0.99 each totalling $93.9 million. The deferred shares
have no voting or dividend rights and on a return of capital on a
winding up, have no valuable economic rights
14 Share Based Payment Reserve
The share-based payments reserve is used to recognise:
- The grant date fair value of options issued to employees but
not exercised
- The grant date fair value of share awards issued to
employees
- The grant date fair value of deferred share awards granted to
employees but not yet vested; and
- The issue of shares held by the Employee Share Trust to
employees.
During 2020 the Group had in place share-based payment
arrangements for its employees and Executive Directors, the LTIP.
The Share Option Plan is fully vested and expensed. The current
year charge through share based payments are in relation to the
pre-existing LTIP arrangements shown below:
31 December
30 June 2020 30 June 2019 2019
$'000 $'000 $'000
At 1 January 14,328 13,290 13,290
Share based payment expense:
Long term incentive plan 445 494 1,038
------------- ------------- -------------
At 30 June/31 December 14,773 13,784 14,328
============= ============= =============
Long Term Incentive Plan ("LTIP") granted in 2020
On 25 June 2020 Options of 3,815,856 ordinary share options was
granted under the LTIP these awards have been made in accordance
with the policy announced to the market on 25 August 2017 and have
been made to certain individuals within the Company in respect of
the performance of the Company as at the end of the financial year
ended 31 December 2019. 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.
These LTIP will vest on 2 January 2023, subject to meeting the
performance criteria set and continued employment in the Company.
The Options are exercisable at nil cost by the participants.
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 31 December 2022. The
amounts shown above represent the maximum possible opportunity.
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.
For Trinity, the performance will be assessed over a three year
period.
The Relative TSR ranking will be determined by calculating the
three month average TSR to the end of the performance period and
dividing this by the three month average TSR to the beginning of
the performance period for all companies in the agreed comparator
group. Companies will be ranked on this basis with the highest
performing company ranked first. The share price used to calculate
the start of the TSR calculation in respect of these awards is
based on the three-month average TSR leading into 31 December 2019,
being 9.683p.
The amount of the award which will vest at the end of the three
year period is based on performance against a comparator group.
Threshold vesting occurs when Trinity is ranked at median against
the comparator group and maximum vesting occurs when Trinity is
ranked at upper quartile (or above). The table below shows the
level of vesting at threshold and maximum:
Vesting occurs on a straight line basis between threshold and
maximum.
Performance Vesting
Below the Median None of the award will vest
-------------------------------
Median (50(th) percentile) 30% of the maximum award will
vest
-------------------------------
Between Median and Upper Quartile Straight Line basis between
these points
-------------------------------
Upper Quartile (75%) 100% of the maximum award will
vest.
-------------------------------
Above the Upper Quartile 100% of the maximum award will
vest
-------------------------------
The total fair value at grant date of the 2020 LTIP awards was
$0.3 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 2020 LTIP awards granted during
the period ended 30 June 2020 included:
June 2020 LTIPs
Grant Dates 25 June 2020
Share price at grant dates GBP7.90
Exercise price GBP0.00
Expected volatility 84.9%
Risk-free interest rates (0.07%)
Expected dividend yields 0%
Vesting dates 30 June 2022
15 Deferred Income Taxation
The analysis of deferred income taxes is as follows:
30 June 2020 30 June 31 December
2019 2019
Deferred tax assets: $'000 $'000 $'000
-Deferred tax assets to be recovered
in more than 12 months (5,333) (5,217) (5,127)
-Deferred tax assets to be recovered
in less than 12 months (811) -- (4,235)
Deferred tax liabilities:
-Deferred tax liabilities to be
settled in more than 12 months 3,538 4,911 4,188
Net deferred tax assets (2,606) (306) (5,174)
-------------------------------------- ------------- -------- ------------
The movement on the deferred income tax is as follows:
30 June 31 December
30 June 2020 2019 2019
$'000 $'000 $'000
------------- -------- ------------
At beginning of year (5,174) (375) (376)
Movement for the year 2,615 106 (4,725)
Unwinding of deferred tax on fair
value uplift (47) (37) (73)
Net deferred tax asset (2,606) (306) (5,174)
============= ======== ============
The deferred tax balances are analysed below:
1 January 30 June 31 Dec 30 June
2019 Movement 2019 Movement 2019 Movement 2020
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Deferred tax
assets
Acquisition (33,436) -- (33,436) -- (33,436) -- (33,436)
Tax losses recognised (36,087) (1,195) (37,282) 2,194 (39,476) -- (39,476)
Tax losses derecognised 63,550 1,951 65,501 1,951 63,550 3,218 66,768
---------- --------------- --------- --------- --------- --------- ---------
(5,973) 756 (5,217) 4,145 (9,362) 3,218 (6,144)
---------- --------------- --------- --------- --------- --------- ---------
Deferred tax
liabilities
Accelerated tax
depreciation 17,170 (650) 16,520 686 15,834 (604) 15,230
Non-current asset
impairment (33,214) -- (33,214) -- (33,214) -- (33,214)
Acquisitions 19,580 -- 19,580 -- 19,580 -- 19,580
Fair value uplift 2,061 (36) 2,025 37 1,988 (47) 1,941
---------- --------------- --------- --------- --------- --------- ---------
5,597 (686) 4,911 723 4,188 (651) 3,537
------------------------- ---------- --------------- --------- --------- --------- --------- ---------
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
conservative and consistent with prior periods. Deferred tax assets
of $ 3.2 million have been de-recognised (2019: $ 0.7 million was
recognised). Deferred tax liabilities have reduced by $ 0.7 million
(2019: $ 0.7 million decrease) 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 $ 226.3 million which have no expiry date (2019: $
234.8 million).
Deferred tax assets and liabilities can only be offset in the
Condensed Consolidated 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).
16 Provisions and Other Liabilities
Non-Current: Decommissioning
cost
$'000
6 months ended 30 June 2020
Opening amount as at 1 January
2020 44,330
Unwinding of discount 610
Translation differences 128
----------------
Closing balance as at 30 June
2020 45,068
================
6 months ended 30 June 2019
Opening amount as at 1 January
2019 41,802
Unwinding of discount 586
Translation differences 181
----------------
Closing balance as at 30 June
2019 42,569
================
Year ended 31 December 2019
Opening amount as at 1 January
2019 41,802
Increase in provision for
new wells 755
Unwinding of discount 1,198
Revision to estimates 380
Decommissioning provision 195
Closing balance at 31 December
2019 44,330
================
Litigation Closure of
Current: claims pits Total
$'000 $'000 $'000
6 months ended 30 June
2020
Opening amount as at 1
January 2020 46 472 518
Decrease in provision -- (2) (2)
Litigation claims settled -- -- --
Closing balance as at
30 June 2020 46 470 516
=========== =========== ======
6 months ended 30 June
2019
Opening amount as at 1
January 2019 115 232 347
Provision for litigation
claims -- -- --
Litigation claims settled (29) -- (29)
Provision for drill pit
closure -- -- --
Closing balance as at
30 June 2019 86 232 318
=========== =========== ======
Year ended 31 December
2019
Opening amount as at 1
January 2019 115 232 347
Decrease in provision (69) -- (69)
Increase in provision -- 240 240
Closing balance at 31
December 2019 46 472 518
=========== =========== ======
17 Trade and Other Payables
30 June 30 June 2019 31 December
2020 2019
$'000 $'000 $'000
-------- ------------- ------------
Current:
Trade payables 1,952 2,009 2,123
Accruals 3,280 3,548 5,039
Other payables 483 951 619
SPT & PT 1,253 4,203 2,605
6,968 10,711 10,386
======== ============= ============
18 Bank Overdraft
30 June 30 June 2019 31 December
2020 2019
$'000 $'000 $'000
-------- ------------- ------------
Bank Overdraft 2,700 -- --
2,700 -- --
======== ============= ============
A demand operating (overdraft) line of $2.7 million was entered
with FirstCaribbean International Bank (Trinidad & Tobago)
Limited ("CIBC"). Details of the overdraft facility:
- Description: Demand revolving credit
- Interest Rate: United States dollar prime rate minus 6.30 %
per annum, effective rate 4.95%
- Repayment: Upon demand at CIBC's discretion
- Debenture: Floating charge debenture over inventory and Trade
Receivables only
- Covenant: Current Ratio not less than 1.25:1
On 02 April 2020 there was a full draw down by the Company of
the $2.7 million.
19 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 & PT for the period, adjusted for mainly non-cash
items being DD&A, ILFA, SOE, Other expenses and Fair value
gains/loss.
The Group presents Adjusted EBITDA as it is used in assessing
the Group's growth and operational efficiencies as it illustrates
the underlying performance of the Group's business by excluding
items not considered by management to reflect the underlying
operations of the Group.
Adjusted EBITDA is calculated as follows:
6 months 6 months Year ended
to 30 June to 30 June December
2020 2019 2019
$'000 $'000 $'000
----------------- ----------------- ----------------
Operating Profit Before SPT & PT 1,851 5,745 10,271
Depreciation, depletion and amortisation 4,362 5,102 9,772
Share option expenses 446 494 1,038
Impairment on financial assets 365 -- 608
Other expenses (1,082) -- 78
Fair value gain on derivative financial
instruments (1,039) -- --
Foreign exchange loss/ (gain) 138 165 76
----------------- ----------------- ----------------
Adjusted EBITDA 5,041 11,506 21,843
$'000 $'000 $'000
----------------- ----------------- ----------------
Weighted average ordinary shares outstanding
- basic 384,049 384,049 384,049
Weighted average ordinary shares outstanding
- diluted 419,357 416,123 415,840
$ $ $
Adjusted EBITDA per share - basic 0.013 0.030 0.057
Adjusted EBITDA per share - diluted 0.012 0.028 0.053
Adjusted EBITDA after the impact of SPT and PT is calculated as
follows:
6 months to 6 months Year ended
30 June 2020 to 30 June December 2019
2019
$'000 $'000 $'000
------------------- ----------------- --------------------
Adjusted EBITDA 5,041 11,506 21,843
SPT 153 (4,427) (7,413)
PT (266) (247) (492)
------------------- ----------------- --------------------
Adjusted EBITDA after SPT and PT 4,928 6,832 13,938
$'000 $'000 $'000
------------------- ----------------- --------------------
Weighted average ordinary shares
outstanding - basic 384,049 384,049 384,049
Weighted average ordinary shares
outstanding - diluted 419,357 416,123 415,840
$ $ $
Adjusted EBITDA per share - basic 0.013 0.018 0.036
Adjusted EBITDA per share - diluted 0.012 0.016 0.034
20 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 Loss for the Earnings Exceptional Adjusted (Loss)/Profit Adjusted
Average period $'000 Per Share Items $ for the period Earnings
Number $ $'000(1) Per Share
Of Shares $
'000
Period ended 30 June 2020
Basic 384,049 (1,631) (0.00) 97 (1,534) (0.00)
Diluted 384,049 (1,631) (0.00) 97 (1,534) (0.00)
Period ended 30 June 2019
Basic 384,049 (726) (0.00) 930 204 0.00
Diluted 384,049 (726) (0.00) 930 204 0.00
Year ended 31 December 2019
Basic 384,049 (9,647) (0.02) 15,187 5,540 0.02
Diluted 384,049 (9,647) (0.02) 15,187 5,540 0.02
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 35,308,043 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 as at 30 June 2020 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 as 30 June
2020.
21 Contingent Liabilities
i) The Farm-Out Agreement for the Tabaquite Block (held by
Coastline International Inc.) has expired. 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 Marine
Outer ("PGB") Block where a subsidiary of Group 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 the 12 month period
contingent upon specific clause within the Letter of Guarantee .
The clause implies that the Guarantor may reduce the Guarantee Sum
available for payment to the MEEI under the Letter of Guarantee on
an obligation by obligation basis provided PGB delivers to the
Guarantor a certificate duly issued and signed by the MEEI.
iii) The Group is party to various claims and actions.
Management have considered the matters and where appropriate has
obtained external legal advice. No material additional liabilities
are expected to arise in connection with these matters, other than
those already provided for in these Condensed Consolidated
financial statements.
iv) On 3 June 2017 a Performance Bond was established in respect
of 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 Heritage/Petrotrin was established for due and
punctual observance of the conditions, things and matters under the
LOA effective until 31 December 2020. Non-performance to the terms
of the LOA may result in the cash deposit being surrendered to
Heritage/Petrotrin.
22 Events after the Reporting Period
1. Hedging
The Company implemented one additional crude hedge option over
the Group's monthly production on 21 July 2020 as follows:
Hedge Floor Cap Strike Price Production Effective Date Expiry Date
$/bbl $/bbl $/bbl Monthly Barrels
Put Spread 20.0 30.0 NA 15,000 1-Jan-21 31-Dec-21
2. Petrotrin Legacy Receipts
There remains an outstanding payment due from Petrotrin for
October and November 2018 crude oil revenues, with an amount
outstanding of $0.43 million at the end of June 2020, for which an
Expected Credit Losses ("ECL") of $0.09 million was recognised.
Subsequent to 30 June 2020 the Group received $0.05 million of
these delayed payments on July and August 2020, with the remaining
$0.38 million remaining outstanding.
3. Partial vesting of LTIP and Issue of Shares
On 10 July 2020 Trinity announced the partial vesting of the
one-off awards made under the Long-Term Incentive Plan ("LTIP") on
25 August 2017. The total number of awards vesting at the 30 June
2020 was 8,916,631.
On 12 August 2020 Trinity has issued 4,745,057 new ordinary
shares in the Company ('Ordinary Shares') to certain employees who
have exercised options that vested in respect of the one-off awards
made under the approved 2017 Long Term Incentive Plan ("LTIP") as
announced to the market on 10 July 2020. The 4,745,057 Ordinary
Shares issued fall under the block admission to trade that was
effective from 16 July 2020. The employees concerned sold 2,824,194
of these shares to satisfy the income tax and national insurance
contributions due.
4. On the 06 September Trinity announced the appointment of
Edouard Brain as Chief Financial Officer ("CFO") effective 14
September 2020. Jeremy Bridglalsingh, currently Managing Director
and CFO, will relinquish his role as CFO at the same time and
concentrate solely on his role as Managing Director of the
Group.
Edouard has 18 years' experience in finance roles for both
public and private oil and gas businesses, including most recently
as the Latin America Regional CFO at Maurel & Prom, a French
listed company with annual sales in excess of $500 million. He has
extensive Mergers & Acquisitions experience, most notably on
transactions within Colombia, Argentina, Brazil, Venezuela and Peru
alongside his long experience of managing a large finance team and
audit processes as part of a public company. Prior to joining
Maurel & Prom in 2006 he was the Latin America Regional
Financial Controller and Internal Auditor for Perenco Group, one of
the largest private oil and gas companies globally.
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