Half-year Report

RNS Number : 9359Z
Trinity Exploration & Production
20 September 2022
 

 

  This announcement contains inside information as stipulated under the UK version of the Market Abuse

Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as

amended.  On publication of this announcement via a Regulatory Information Service, this information is

in the public domain.

 

20 September 2022

 

Trinity Exploration & Production plc

("Trinity" or "the Company" or "the Group")

 

Interim Results

 

Strong operating and financial resilience continue to underpin the Group's pursuit of multiple initiatives to meaningfully scale the business

 

Trinity Exploration & Production plc (AIM: TRIN) , the independent E&P company focused on Trinidad and Tobago ("T&T"), announces its unaudited interim results for the six-month period ended 30 June 2022 ("H1 2022" or "the period"). 

 

Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:

"The first six months of 2022 was a period of consolidation for Trinity, positioning the Company strongly for the second half of the year and beyond. Stable production and higher oil prices boosted our revenues in the period, the benefit of this will be fully felt when our hedges expire at the end of 2022. Towards the end of the first half the Company commenced a potentially transformational drilling programme onshore Trinidad. The six-well programme is ongoing, with drilling of the most notable wells, a horizontal well and a deeper appraisal well, due to start in the coming months. I believe this has the potential to meaningfully increase our scale, and as such prove to be the start of one of the most exciting periods in the Company's history. I am also pleased to announce the Company's intention to implement a new Capital Allocation Policy which is likely to include the payment of a regular dividend and a share buy-back programme to further deliver value to our shareholders."

 

2022 Year to Date Strategic Highlights

 

H1 2022 saw production levels broadly maintained and the Company benefit from stronger operational cash flows due to higher realised oil prices, with the impact of these partially offset by the effect of hedging instruments . The Company's oil price hedge payment exposure reduces and unwinds in H2 2022 and there are no hedging instruments in place currently for 2023. In addition to continuing its programme of recompletions and workovers which kept production stable, the Company commenced its fully funded onshore drilling operations.  The first two wells successfully encountered target reservoir sections as prognosed, confirming our pre -drill expectations, and are currently on production test.  The Company is preparing to move onto the third well of the planned six well campaign.

 

Onshore

 

Onshore continues to be a robust set of assets with a break-even price of USD 18.5/bbl (H1 2021: USD 17.9/bbl) even after observing inflationary increases from the supply chain. Successful analysis and interpretation of the 3D Seismic across all our onshore Blocks, including PS-4 which was acquired in December 2021, has de-risked our drilling campaign that commenced in June 2022. 

 

East Coast

 

The Company has continued to refine its plans for Galeota via a staged development initially exploiting the 9.77 mmbbls of 2P reserves in the Trintes field.  This approach reduces risk and capex and offers a shorter timeframe to achieve production. 

 

Galeota's 40.39 mmbbls 2C resources offer the potential for future phase of development or optimisation of the development. The Company is hopeful that the Government of Trinidad and Tobago will conclude its deliberations and provide further details on reforms to Supplemental Petroleum Tax (" SPT ") in the near term and this will facilitate potential coventurers to fully assess the economics of the opportunity when the Galeota farm down process recommences.

 

Corporate

 

The Board wishes to advise shareholders of its intention to announce a new Capital Allocation Policy during H1 2023, once the outcome of the six well drilling campaign has been assessed. This is likely to include:

· Payment of a regular dividend that will help inform future capital allocation decisions whilst not impeding the Company's growth potential; and

· A buy-back programme that will flex depending on commodity prices.

 

Further details on Trinity's Capital Allocation Policy will be provided in conjunction with the preliminary results for 2022.  In the interim, the Board is also considering a modest share buyback programme, and expects to provide further guidance in due course.

 

H1 2022 Key Performance Indicators

 

Trinity prepares the interim financial statements in compliance with International Financial Reporting Standards (" IFRS ") Management considers additional Alternative Performance Measures (" APMs ") to give further insight into the performance of the Group. Management believes that analysis of both performance measures delivers improved guidance to Management for operational and strategic decision-making purposes. The Group was profitable in H1 2022 under an APM basis but not IFRS. This is mainly due to the unrealised fair value hedge expense recognised at 30 June 2022, which is expected to significantly decrease in H2 2022 due to the reduction in oil prices.  Higher oil price realisations and relatively stable net sales volumes, resulted in a 58% increase in Revenues to USD 48.5 million (H1 2021: USD 30.7 million) and a 28% increase in Adjusted EBITDA (Note 19 in the financial statements) to USD 12.8 million (H1 2021: USD 10.0 million). The period-end cash balance was USD 15.0 million (H1 2021: USD 19.0 million) due to increased hedging payments and taxes in H1 2022, resulting from higher oil prices, and increased capital expenditure. A summary of the period-on-period operational and financial highlights are set out below:


 

H1 2022

H1 2021

Change %

Average realised oil price1

USD/bbl

90.1

55.9

61

Average net sales2

bopd

2,974

3,032

(2)

Revenues

USD million

48.5

30.7

58

Cash balance

USD million

15.0

19.0

(21)


IFRS Results

 




Operating Profit before SPT & PT

USD million

5.4

2.9

84

Total Comprehensive (Loss)/Income

USD million

 (0.7)

1.6

(145)

Earnings per share - diluted

USD cents

(0.9)

3.8

(125)


APM Results (
APM measures exclude non-cash items)

Adjusted EBITDA3

USD million

12.8

10.0

28

Adjusted EBITDA4

USD/bbl

23.7

18.2

30

Adjusted EBITDA margin5

%

26.3

32.6

(19)

Adjusted EBITDA after Current Taxes6

USD million

4.8

6.8

(29)

Adj. EBITDA after Current Taxes per share - diluted

US cents

11.4

16.1

(29)

Consolidated operating break-even

USD/bbl

32.4

27.8

17

Net cash plus working capital surplus8

USD million

18.6

22.3

(17)

 

Notes:

1.  Realised price: Actual price received for crude oil sales per barrel ("bbl").

2.  Average net sales: This refers to average sales 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") and other non-cash expenses, namely Share Option Expenses, Impairment of Financial Assets, FX Gains/Losses and Fair Value Gains/Losses on Derivative financial instruments. Adjusted EBITDA for 2021 updated to include Covid-19 expense

4.  Adjusted EBITDA (USD/bbl): Adjusted EBITDA/sales volume over the period.

5.  Adjusted EBITDA Margin (%): Adjusted EBITDA/Revenues.

6.  Adjusted EBITDA after Current Taxes: Adjusted EBITDA less Supplemental Petroleum Taxes ("SPT"), Property Taxes ("PT"), Petroleum Profits Tax ("PPT") and Unemployment Levy ("UL").

7.  Group operating break-even: The realised price/bbl where the Adjusted EBITDA/bbl for the Group is equal to zero.

8.  Net cash plus working capital surplus:  Current Assets less Current Liabilities (other than Derivative financial asset / liability and Provision for other liabilities).

 

H1 2022 Strategic Highlights

 

· The onshore drilling campaign commenced on 29 June 2022. This fully-funded programme, which includes four conventional infill wells, a horizontal well and a deeper appraisal well, is targeting an aggregate of up to 1,100mbbls of reserves at a cost of USD 14 million to USD 17 million.  These are significantly higher volumes per dollar of capital invested, and, in a success case, are expected to generate materially increased cash returns compared with previous drilling programmes.

 

· Having commenced drilling, the near-term focus is on completing the 2022 drilling programme safely, on time and on budget, and bringing these wells onto production in short order. It is expected that the four conventional, low angle, wells will be brought on to production before this year end, collectively contributing to an increase of 200-250 bopd. Production is anticipated to continue to increase into Q1 2023 subject to successful outcomes for the horizontal well and deeper well, the combination of which is projected to underpin a material increase in operating cash flow for 2023. The Company has no hedging instruments in place for 2023. 

 

H1 2022 Financial Highlights

· Average realisation of USD 90.1/bbl for H1 2022 (H1 2021: USD 55.9/bbl).

· Revenues up 58% to USD 48.5 million (H1 2021: USD 30.7 million).

· Cash operating costs of USD 17.6/bbl (H1 2021: USD 15.2/bbl) reflecting the newly acquired PS-4 asset. Higher number of workovers and reactivations conducted in H1 2022 vs H1 2021 ( 61 workovers and reactivations in H1 2022 vs 43 conducted in H1 2021), higher vessel costs and fuel costs due to increased rates, and certain one-off initial maintenance operating costs on the PS-4 asset.

· General and administrative costs of USD 6.6/bbl (H1 2021: USD 5.3/bbl) due to increase in levies arising on higher oil prices, increased software maintenance costs related to supporting the technical teams and additional technical staff related costs.

· Cash balance of USD 15.0 million as at 30 June 2022 (YE 2021: USD 18.3 million) reflecting a combination of strong operating cash generation being impacted by increased hedge payments and taxes on the account of higher oil prices, and increased capex, including the purchase of long lead items to support the drilling campaign.

· Average operating break-even for H1 2022 was USD32.4/bbl (unaudited) (H1 2021: USD 27.8/bbl) .

 

H1 2022 Operational Highlights

 

· Safely commenced the fully funded six well drilling campaign within the WD-5/6 onshore block:

Currently progressing to the third of four low angle wells, which will be followed by one horizontal and one deep appraisal well.

The drilling campaign is expected to lead to a meaningful increase in production by the end of H1 2023, when all six wells, in a success case, are expected to be onstream.

· H1 2022 average net sales volumes of 2,974 bopd represents a modest 2% decrease compared to the corresponding period last year (H1 2021: 3,032 bopd). Base production contributed 2,907 bopd and the new added asset, PS-4 contributed 67 bopd.

· Eleven (11) recompletions ("RCPs") (H1 2021: 3) and 61 workovers and reactivations ("WOs") (H1 2021: 43) were completed during the period, with swabbing continuing across the onshore and west coast assets.

6 additional RCPs are being worked up for execution in H2 2022, of which 50% are already approved by the relevant regulatory bodies.

· Production volumes have benefited from the Company's focus on well performance and optimisation.

T he Company's largest onshore field, WD-5/6, now has 85% of production under automation. The automation of these wells has been carefully implemented over the past year and the early results are very positive. 28 of the 31 wells have demonstrated extended run life and we are seeing results initially in reduced personnel and equipment time in H1 2022. The Company is currently quantifying the additional benefits such as reduced physical monitoring, reduction in carbon footprint and HSE exposure.  

· Galeota Field Development Plan ("FDP")  

The farm down process commenced in December 2021. Trinity received the final Certificate of Environmental Clearance ("CEC") for the Echo Field Development in Q1 2021 which is a critical step in advance of moving towards the Final Investment Decision (" FID "). However, whilst initial feedback from the farm down process was encouraging, a number of participants informed us that they were unable to fully assess the economics of this opportunity without clarity on the expected fiscal reforms (particularly relating to SPT). Hence, pending SPT reform, the Company paused the Galeota farm down process and advanced a development option focusing initially on achieving production from the field's 2P reserves. 

· The onshore 3D seismic interpretation has unlocked several very encouraging, potentially meaningful new oil plays; a hopper of stratigraphically deeper ('deeper test') prospects, leads and infill opportunities. Thus far three prospects have been matured, one of which we intend to drill in the 2022 drilling campaign.

· Net average production guidance for 2022 remains 2,900-3,100 bopd (before the impact of the drilling campaign and/or acquisitions), with production anticipated to continue to increase into Q1 2023.

 

Post Period End Highlights

 

Outlook

 

The first two wells in the Palo Seco area have been drilled with no Lost Time Injuries (" LTI 's") over the period, a positive result for the drilling team and lead contractors. Both wells encountered target reservoir sections as prognosed with a combined net pay (both primary and secondary targets) of 690 feet, confirming our pre-drill subsurface models and expectations. Both wells are on production test currently and will be optimised for stabilised production in the coming weeks. The next well in the campaign will be a conventional well in Forest Reserve area with a planned spud date before the end of September 2022.

 

Having completed two wells and with drilling imminent on the third well, the near-term focus is on completing the 2022 campaign safely, on time and on budget, and bringing these wells onto production in short order. It is expected that the four conventional low angle wells will be producing before this year end, with each contributing to a meaningful increase in the daily production rate. Production is expected to continue to increase into Q1 2023, subject to successful outcomes from drilling the horizontal and deeper wells, the combination of which is projected to underpin a material increase in operating cash flow for 2023, for which no hedging instruments are in place. 

 

The interim results as at 30 June 2022 includes the impact of accounting for a Mark to Market (" MTM ") derivative hedge liability for H2 2022 of USD 6.1 million, as well as the cash cost incurred during H1 2022 of USD 6.0 million. We currently expect that hedge costs in H2 will be materially lower than H1, due to the reduction in hedge volumes and lower forecast oil prices in H2. Hedge expense incurred in the two months July to August 2022 totalled USD 1.3 million and the current MTM exposure for the following four months is USD 1.9 million. No hedge instruments are currently in place for 2023.

 

At the end of June 2022, VAT refunds outstanding were USD 5.4 million. Subsequent to 30 June 2022 the Group has received VAT refunds of USD 2.9 million.

 

Trinity is participating in the 2022 Onshore and Nearshore Competitive Bid Round which was opened by the Ministry of Energy and Energy Industries on 8 July. This bid round contains eleven blocks within the prolific southern basin amongst currently producing fields; located in the Central to Southern areas within the southern basin and Southwest Peninsula nearshore coast of Trinidad. Bid submissions are due on 9 January 2023 with the award of the blocks tentatively scheduled for April 2023.

 

The Company has purchased a data package from the Ministry Energy and Energy Industries which Trinity's technical teams are reviewing, and the shortlisted blocks will be subject to robust reviews with the Technical Committee in the coming months.

 

In addition, on 1 September, the Ministry of Energy and Energy Industries announced that it will be offering blocks in the Shallow Water Competitive Bid Round in the fourth Quarter of 2022.  Initial nomination of blocks of interest is due by 11 October.  

 

Analyst Briefing:

A briefing for Analysts will be held at 13:00 (UK time) today via web conference. Analysts wishing to join should contact trinity@vigoconsulting.com for details.

 

Investor Presentation:

The Company will also be hosting a live presentation today via the Investor Meet Company platform at 15:00 (UK time). The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 09:00 the day before the meeting or at any time during the live presentation.

 

Investors can sign up to Investor Meet Company for free and add to meet Trinity Exploration & Production plc via: https://www.investormeetcompany.com/trinity-exploration-production-plc/register-investor

 

Enquiries

 

Trinity Exploration & Production

Nick Clayton, Non-Executive Chairman

Jeremy Bridglalsingh, Chief Executive Officer

Julian Kennedy, Corporate Development Manager

 

 

Via Vigo Consulting

 

SPARK Advisory Partners Limited (Nominated Adviser & Financial Adviser)

Mark Brady

James Keeshan

 

+44 (0)20 3368 3550

Cenkos Securities PLC (Broker)

Leif Powis (Corporate Broking)

Neil McDonald

 

+44 (0)20 7397 8900

+44 (0)131 220 6939

Vigo Consulting Limited

Finlay Thomson/Patrick d' Ancona

t rinity @vigoconsulting.com

+44 (0)20 739 0 0230

 

Competent Person's Statement

 

All reserves and resources related information contained in this announcement has been reviewed and approved by Dr. Ryan Ramsook, Trinity's Executive Manager, Subsurface. Dr. Ramsook is also a Senior Lecturer at the University of the West Indies and Fellow of the Geological Society (FGS) of London. He is a Geologist by background with 16+ years' experience.

 

About Trinity ( www.trinityexploration.com )

 

Trinity is an independent oil 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 ten licences and, across all of the Group's assets, management's estimate of the Group's 2P reserves as at the end of 2021 was 19.73 mmbbls. Group 2C contingent resources are estimated to be 47.22 mmbbls. The Group's overall 2P plus 2C volumes are therefore 66.95 mmbbls.

 

Trinity is quoted on AIM, a market operated and regulated by the London Stock Exchange Plc, under the ticker TRIN.

 

Disclaimer

This document contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil exploration and production business. Whilst the Group believes the expectation reflected herein to be reasonable in light of the information available to it at this time, the actual outcome may be materially different owing to macroeconomic factors either beyond the Group's control or otherwise within the Group's control.

 

OPERATIONAL REVIEW

 

The continuing impact of the COVID-19 pandemic, compounded by the Russian-Ukraine war, have led to significant volatility in global oil demand and supply, and caused dramatic movements in oil prices. While crude oil demand has continued to remain high, boosting oil prices, Trinity has experienced increased costs and reduced availability of materials and services as hydrocarbon producers (local and international) compete for limited resources.

 

Covid-19 has continued to affect the Company's workforce with 86 positive COVID-19 cases recorded across the West Coast, East Coast and Onshore assets in H1 2022. Thankfully, all employees have fully recovered and are now back to work. The impact on Trinity of the pandemic has continued to be relatively muted, but has required ongoing, proactive management.

 

H1 2022 saw increasing costs and lead times for both materials and services. The Company sought to put contingencies in place where possible and, despite the demand and inflationary challenges being faced by the industry, the Company was able to deliver its planned RCP programme, complete routine WOs, reactivations, swabbing and automation. In addition, the Company commenced its planned six-well onshore drilling programme and this, together with other elements of the H2 2022 activity set, is expected to lead to strong production levels going into Q1 2023.

 

Onshore operations

· H1 2022 average net sales was 1,688 bopd, a 2% increase on 2021 (H1 2021 1,657 bopd). This increase is attributed to the acquisition of the PS-4 licence in Q4 2021 (H1 2022: 67 bopd) and the robust base management system implemented by the engineering and operations teams. A total of 43 WOs were completed in H1 2022 (H1 2021: 37) in conjunction with 11 RCPs completed in H1 2022 (H1 2021: 3).

Work continued to build a more robust and analytical approach to well surveillance and optimisation using SCADA systems. Software designed to optimise pumping system performance was operationalised and training completed during the period.  

· Work continues on prototyping and testing new bespoke, automated solutions with the aim of providing a viable, cost-effective automation option for lower tier production wells. This has been found to be highly effective in quickly identifying Electrical Shut Downs (" ESDs ") and limiting their impact on production .

 

· Improved sand management strategies commenced in June 2022 and are expected to continue with a particular focus on high-producing wells prone to excessive sand production.

 

The H2 2022 planned work programme involves the progression of the six-well drilling campaign as well as RCPs and ongoing base management via WOs, reactivations and swabbing across all onshore fields.

 

East Coast operations

· H1 2022 average net sales was 1,037 bopd (H1 2021: 1,123 bopd) an 8% decrease.  The decrease in sales levels was as a result of a combination of mechanical failures of downhole pumps requiring workovers, delayed by planned remedial platform topside work which impacted the timing of returning the wells to production. A total of 13 WOs were undertaken during H1 2022 (H1 2021: 6 WOs).

 

H2 2022 work programme will include routine WOs and reactivations.

 

West Coast operations

H1 2022 average net sales was 249 bopd (H1 2021: 253 bopd). The 2% decrease in sales was the result of continued focus on preserving base production, including increased swabbing and optimisation activities in the field. There were 3 workovers conducted during this period (H1 2021: 0 WOs).

 

H2 2022 planned work programme is expected to include 4 routine WOs and the reactivation of the ABM 151 well.

 

FINANCIAL REVIEW

 

Income Statement Analysis


 

H1 2022

H1 2021

Change

Production

 

 

 


Average realised oil price (USD/bbl)


 90.1

55.9

 34.2

Average net Sales (bopd)


 2,974

3,032

 (58)






Statement of Comprehensive Income

 

USD'000

USD'000

USD'000

Operating revenues


 48,515

 30,663

  17,852

Operating expenses (including realised Derivative expense and Covid-19 costs but excluding Non-cash items, SPT & PT)


(35,712)

 (20,635)

   (15,077)

Operating profit before Non-cash items, SPT & PT


 12,803

 10,028

  2,775

DD&A


 (3,884)

 (3,656)

 (228)

Other Non-Cash Items


 (3,568)

(3,460)

 (108)

Operating profit before SPT & PT


 5,351

  2,912

  2,439

SPT


 (5,049)

 (1,971)

  (3,078)

PT


-

 (288)

  288

Operating profit before exceptional items


302

  653

(351)

Exceptional items


 -

 (95)

  95

Operating Profit after Exceptional items


 302

 558

  (256)

Finance income


 24

 62

  (38)

Finance cost


 (648)

 (748)

  100

Loss Before Taxation

Income Taxation (expense)/ credit

 


(322) 

 (76)

(128)

1,772

(194)

(1,848)

(Loss)/Profit after Taxation


(398)

1,644

  (2,042)

Total Comprehensive (Loss)/Income for the period





Currency translation


 (324)

 3

  (327)

Total Comprehensive (Loss)/Income


 (722)

 1,647

  (2,369)

 

Operating Revenues

Operating revenues of USD 48.5 million (H1 2021: USD 30.7 million) increased due to higher realised oil price and relatively stable production volumes sold in the period .

 

Operating expenses (excluding Non-cash items)

Operating expenses (excluding non-cash items) of USD (35.7) million (H1 2021: USD (20.4) million) comprised:

· Royalties of USD (16.2) million (H1 2021: USD (9.4) million), due to higher oil prices

· Production costs ("Opex") of USD (9.5) million (H1 2021: USD (8.1) million), mainly due to increased number of WOs conducted in H1 2022 (47) (H1 2021: 37), higher swabbing costs, higher tanker and vessel rates which were driven by higher crude oil and fuel prices and general increased inflationary pressures.  

· G&A expenditure of USD (3.6) million (H1 2021: USD (2.9) million), due to one-off staff related costs, increased ICT software maintenance costs mainly related to the technical teams, increased technical consultancy fees and increased levies due to higher revenue recognised in H1 2022.

· Realised derivative expense of USD (6.0) million (H1 2021: nil) on account of higher oil prices.

· COVID-19 related costs USD (0.4) million (H1 2021: 0.3 million classified as exceptional items in 2021) based on Trinity's COVID-19 response plan implementation including early detection through Covid-19 testing, offshore employee isolation (quarantine costs) and heightened sanitisation efforts across all assets. The Company recorded 86 positive COVID-19 cases in H1 2022 compared to 20 positive cases in H1 2021.

 

Non-cash operating expenses

Non-cash operating expenses comprised:

· Depreciation, Depletion and Amortisation ("DD&A") charges of USD (3.9) million (H1 2021: USD (3.7) million)

· Unrealised derivative (expenses)/income USD (3.2) million (H1 2021: USD (2.1) million) comprising the movement in the fair valuation of crude oil derivatives during the period

· Share option expense USD (0.3) million (H1 2021: USD (0.3) million)

· Impairment of financial assets of USD (0.1) million (H1 2021: USD (1.0) million)

· Foreign exchange gain USD 0.0 million (H1 2021: USD (0.1) 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 5.8 million (H1 2021: USD 3.2 million) mainly due to higher operating revenues resulting from the higher oil prices.  

 

SPT & PT

The Group incurred SPT charges in relation to both its onshore and offshore assets in H1 2022 of USD (5.0) million (H1 2021: (2.0) million), on account of the realised oil price being higher than USD 50.0/bbl throughout the period and SPT now being incurred on onshore assets where realised price exceeded USD 75.0/bbl.  There was no accrual for PT for the period (H1 2021: USD (0.3) million). SPT and PT are classified as "operating expenses" rather than "income taxation" under IFRS.

 

Exceptional items

Exceptional items charge of nil (H1 2021: USD (0.1) million) relate to:

· Capital Reorganisation costs nil (H1 2021: USD (0.1) million)

 

Net Finance Cost

Net finance costs for the period of USD (0.6) million (H1 2021: USD (0.7) million), comprising:

· Unwinding of the discount on the decommissioning provision of USD (0.6) million (H1 2021: USD (0.6) million)

· Interest and expenses on bank overdraft - USD (0.0) million (H1 2021: USD (0.1) million)

· Interest on leases - USD (0.0) million (H1 2021:  USD (0.0) million)

 

Income Taxation

Taxation charge for the period was USD (0.1) million (H1 2021: USD 1.8 million credit), comprising:

· Petroleum Profits Tax (" PPT ") of USD (2.1) million (H1 2021: USD (0.7) million)

· Unemployment Levy (" UL ") of USD (0.8) million (H1 2021: (0.3) million)

· Reduction in deferred tax liability of USD 0.0 million (H1 2021: USD 0.6 million)

· Increase in deferred tax assets of USD 2.8 million (credit) (H1 2021: USD 2.2 million credit), due to an increase in projected oil prices and hence taxable profits over the next three years

 

As at 30 June 2022, the Group had unrecognised tax losses of USD 207.4 million (H1 2021: 216.3 million) which have no expiry date.

 

Total Comprehensive (Loss)/ Income

Total Comprehensive Loss for the period was USD (0.7) million loss (H1 2021: USD 1.6 million income). The reduction is mainly driven by the combined impact of SPT and the increase in both realised and unrealised derivative expenses resulting from high oil prices experienced in H1 2022.

 

Cash Flow Analysis

 

Opening Cash Balance

Trinity began the year with an initial cash balance of USD 18.3 million (2021: USD 20.2 million).

 

 

Summary of Statement of Cash Flows




H1 2022

H1 2021


USD'000

USD'000

Opening cash balance

18,312

20,237

Cash movement

 

 

Cash inflow from operating activities

7,713

7,670

Changes in working capital

(1,922)

(2,955)

Income taxation paid

(2,882)

(1,201)

Net cash inflow from operating activities

2,909

3,514

Net cash outflow from investing activities

(5,707)

(4,461)

Net cash outflow from financing activities

(331)

(316)

Decrease in cash and cash equivalents

(3,129)

(1,263)

Effects of foreign exchange rates on cash

(233)

--

Closing cash balance

14,950

18,974

 

Net cash inflow from operating activities

Net cash inflow from operating activities was USD 2.9 million (H1 2021: USD 3.5 million):

· Operating activities for H1 2022 generated an operating cash flow before changes in working capital and income taxes of USD 7.7 million (H1 2021:  USD 7.7 million)

· Changes in working capital resulted in a net decrease of USD (1.9) million (H1 2021: net decrease of USD (3.0) million)

· Income Taxation - PPT and UL paid USD (2.9) million (H1 2021: USD (1.2) million) resulting from higher taxable profits

 

Cash outflow from investing activities

Investing cash outflows for H1 2022 was USD (5.7) million (H1 2021: USD (4.5) million) which included infrastructure investments across Trinity's assets, production capex including RCPs in H1 2022, drilling planning and long lead investment for the drilling campaign which began on 29 June 2022, subsurface capex, exploration and evaluation capex including Galeota asset development costs incurred to 31 March 2022 and renewable capex initiatives.

 

Net cash outflow from financing activities

Financing cash outflows for H1 2022 was USD (0.3) million comprising USD (0.3) million cash payment on leases net of USD 0.0 million in finance income from short-term deposits (H1 2021: USD 0.3 million).  

 

Closing Cash Balance

Trinity's cash balance at 30 June 2022 was USD 15.0 million (31 December 2021: USD 18.3 million).

 

Statement of Financial Position Analysis

 

H1 2022

YE 2021

Change

USD'000

USD'000

USD'000




Assets:




Non-current Assets

  102,494

 96,906

 5,588

Current Assets

  33,353

 32,879

 474





Liabilities:




Non-Current Liabilities

  58,491

 57,812

 679

Current Liabilities

  20,851

 15,052

 5,799





Equity and Reserves:




Capital and Reserves to Equity Holders

  56,505

 56,921

(416)





Cash plus working capital surplus

 18,628

 20,756

(2,128)


Non-current Assets

Non-current assets increased by 6% to USD 102.5 million at H1 2022 from USD 96.9 million at YE 2021:

· Property, plant and equipment USD 51.8 million (YE 2021: USD 49.5 million) increase of USD 2.3 million mainly relates to USD 5.8 million investment less DDA of 3.5 million and Right of use asset of USD 0.6 million (YE 2021: USD 0.6 million) relating to motor vehicles, office building, staff house and office equipment leases that met the recognition criteria of a lease under IFRS 16.

· Intangible assets USD 31.0 million (YE 2021: USD 30.8 million) increase of USD 0.2 million mainly relates to USD 0.3 million investment less amortisation of (0.1) million

· Deferred tax asset of USD 14.3 million (YE 2021: USD 11.5 million) increase of USD 2.8 million due to the increase in the forecast taxable profits resulting from higher forecast oil prices

Abandonment funds and performance bond of USD 4.7 million (YE 2021: USD 4.5 million)

· Right of use asset of USD 0.6 million (YE 2021: USD 0.6 million)

 

Current Assets

Current assets increased by 2% to USD 33.4 million at H1 2022 from USD 32.9 million at YE 2021:

· Cash and cash equivalents of USD 15.0 million (YE 2021: USD 18.3 million)

· Trade and other receivables of USD 14.1 million (YE 2021: USD 10.8 million)

Trade and other receivables (less impairment) of USD 6.6 million (YE 2021: USD 4.6 million)

VAT recoverable of USD 5.4 million (YE 2021: 4.6 million)

Prepayments and other receivables (less impairment) of USD 2.1 million (YE 2021: USD 1.6 million)

· Inventories USD 4.3 million (YE 2021: USD 3.8 million)

 

Non-current Liabilities

Non-current liabilities increased to USD 58.5 million at H1 2022 from USD 57.8 million at YE 2021, primarily due to:

· Provision for other liabilities (predominantly decommissioning costs) of USD 56.3 million (YE 2021: USD 55.7 million)

· Lease liability of USD 0.2 million (YE 2021: USD 0.1 million)

 

Current Liabilities

Current liabilities increased to USD 20.9 million at H1 2022 (YE 2021: USD 15.1 million) primarily due to:

· Trade and other payables of USD 11.5 million (YE 2021: USD 8.9 million)

Trade payables of USD 2.7 million (YE 2021: USD 2.3 million)

Accruals and other payables of USD 5.7 million (YE 2021: USD 5.0 million)

SPT payable of USD 3.1 million (YE 2021: USD 1.6 million)

· The non-cash fair value of derivative instruments liability increased at H1 2022, creating a current liability of USD 6.1 million (YE 2021: USD 2.9 million). These instruments were implemented to hedge against potential fall in oil prices and are due to expire at the year end.

· CIBC bank overdraft facility USD 2.7 million (YE 2021: USD 2.7 million)

· Lease liability of USD 0.5 million (YE 2021: USD 0.6 million)

 

Cash plus Working Capital Surplus

Cash plus working capital surplus calculated as Current Assets less Current Liabilities (excluding Provisions for other liabilities and Derivative assets/(liabilities)) decreased by 11% to USD 18.6 million (YE 2021: USD 20.8 million)

 

Reconciliation between Adjusted EBITDA after Current Taxes and Cash Inflow from Operating Activities

 

 

H1 2022 USD'000

H1 2021

USD'000

Adjusted EBITDA after Current Taxes

4,831

6,771

Exceptional items

--

(95)

Foreign exchange gain/(loss)

41

(52)

Translation differences as per Statement of Cash flows

(41)

48

Changes in Working Capital

(1,922)

(2,955)

Income tax incurred

2,882

998

Income tax paid

(2,882)

(1,201)

Cash flow from operating activities

2,909

3,514

 

APPENDIX 1: TRADING SUMMARY

 

A summary of realised price, production, royalties, Opex, G&A and operating break-evens expenditure metrics is set out below:

 

Trading Summary Table

 

Details

H1 2022

H1 2021

Change %





Realised price (USD/bbl)

 90.1

55.9

  61

 

Sales (bopd)




Onshore

 1,688

1,656

 2

West Coast

 249

253

 (2)

East Coast

 1,037

1,123

(8)

Group Consolidated

 2,974

3,032

(2)





Metrics (USD/bbl)




Royalties/bbl - Onshore

38.9

20.5

89

Royalties/bbl - West Coast

16.7

10.1

66

Royalties/bbl - East Coast

19.1

13.7

39

Royalties/bbl - Consolidated

30.1

17.1

76





Opex/bbl - Onshore

14.0

12.8

9

Opex/bbl - West Coast

28.2

22.2

27

Opex/bbl - East Coast

22.2

17.3

28

Opex/bbl - Group Consolidated

17.6

15.2

16





G&A/bbl  - Group Consolidated

6.6

5.3

25

 

Operating break-even (USD/bbl)




Onshore

18.5

17.9

3

West Coast

26.9

28.1

(4)

East Coast

27.2

23.2

17

Group Consolidated

32.4

27.8

17

 

Notes: Group consolidated operating break-even: The realised price/bbl for which the adjusted EBITDA/bbl exclusive of net derivative expense/income for the Group is equal to zero. H1 2021, Covid-19 costs were not included as part of the operating break-even KPI.  

 

STATEMENT OF DIRECTORS' RESPONSIBILITY

 

The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with International Accounting Standards ("IAS") and that the interim management report includes:

 

· 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

 

 

 

Jeremy Bridglalsingh

Chief Executive Officer

 

19 September 2022

 

 

INDEPENDENT REVIEW REPORT TO TRINITY EXPLORATION & PRODUCTION plc

  Report on the Condensed Consolidated Interim Financial Statements

 

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 2022 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standards and the London Stock Exchange AIM Rules for Companies.

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 2022 which comprises the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Cash Flow Statements.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). 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.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standards.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with

the London Stock Exchange AIM Rules for Companies 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.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

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 AIM Rules for Companies 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, UK

19 September 2022

 

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

 

Trinity Exploration & Production plc

Condensed Consolidated Statement of Comprehensive Income

for the period ended 30 June 2022

(Expressed in United States Dollars)

 

 

Notes

6 months to 30 June 2022

 

6 months to 30 June 2021

 

 

Year ended 31 December 2021

 


 

$'000

 

$'000

 

$'000

 


 

(unaudited)

 

(unaudited)

 

(audited)

 

Operating Revenues







 

Crude oil sales


48,514


30,663


66,257

 

Other income


1


--


1

 



48,515


30,663


66,258

 

Operating Expenses







 

Royalties


(16,204)


(9,387)


(19,828)

 

Production costs


(9,498)


(8,139)


(17,625)

 

Depreciation, depletion and amortisation

8-10

(3,884)


(3,656)


(7,428)

 

General and administrative expenses


(3,581)


(2,848)


(7,030)

 

Impairment of financial assets/net reversal


(45)


(993)


754

 

Share option expense

14

(316)


(307)


(626)

 

Covid-19 expenses


(459)


(261)


(669)

 

Foreign exchange gain/(loss)


41


(52)


(14)

 

Realised derivative expense

3,12

(6,011)


--


(1,293)

 

Fair value expense on derivative instruments


(3,207)


(2,108)


(3,149)

 



(43,164)


(27,751)


(56,908)

 

Operating Profit Before Supplemental Petroleum Taxes ("SPT") and Property Tax ('PT")


5,351

 

2,912

 

9,350

 

 







 

SPT


(5,049)


(1,971)


(5,074)

 

PT (charge)/net reversal


--


(288)


1,516

 

Operating Profit Before Covid expenses, Impairment and Exceptional Items

 

302

 

653

 

5,792

 








 

Impairment

4

--


--


(1,316)

 

Exceptional items

5

--


(95)


(113)

 

Operating Profit After Impairment and Exceptional Items

 

302

 

558

 

4,363

 








 

Finance Income

7

24


62


94

 

Finance cost

7

(648)


(748)


(1,475)

 








 

(Loss)/Profit Before Income Taxation


(322)

 

(128)

 

2,982

 








 

Income Taxation (expense)/ credit

6

(76)


1,772


4,744

 

(Loss)/Profit for the period


(398)

 

1,644

 

7,726

 

 







 

Other Comprehensive (loss)/Income







 

Currency Translation


(324)


3


--

 








 

Total Comprehensive (loss)/Income for the period


(722)

 

1,647

 

7,726

 

Earnings per share (expressed in dollars per share)


 

 

 

 

 

 

Basic

20

(0.01)

 

0.04

 

0.20

 

Diluted

20

(0.01)

 

0.04

 

0.18

 

 

 

 

Trinity Exploration & Production plc

Condensed Consolidated Statement of Financial Position

for the period ended 30 June 2022

(Expressed in United States Dollars)

 

 

Notes

As at 30 June 2022

As at 30 June 2021

 

As at 31 December 2021

 

ASSETS

 

$'000

$'000

$'000

 


(unaudited)

(unaudited)

(audited)

Non-current Assets 





Property, plant and equipment

8

51,828

37,769

49,507

Right-of-use assets

9

608

762

  616

Intangible assets

10

31,031

28,320

30,759

Abandonment fund


4,260

3,571

4,021

Performance bond (Investment held to maturity)


473

253

473

Deferred tax asset

15

  14,294

  8,218

11,530

 


102,494

78,893

96,906

Current Assets





Inventories


4,283

5,366

3,820

Trade and other receivables

11

14,120

10,120

10,747

Cash and cash equivalents


14,950

18,974

18,312



33,353

34,460

32,879

Total Assets

 

135,847

113,353

129,785

 





Equity





Capital and Reserves Attributable to Equity Holders





Share capital

13

389

97,692

389

Share premium

13

--

139,879

--

Share based payment reserve

14

4,087

3,586

3,784

Reverse acquisition reserve


(89,268)

(89,268)

(89,268)

Translation reserve


(1,971)

(1,647)

(1,650)

Retained earnings/ (accumulated deficit)


143,268

(99,766)

143,666

Total Equity

 

56,505

50,476

56,921






Non-current Liabilities





Lease liabilities

9

202

232

97

Deferred tax liability

15

1,983

2,062

2,025

Provision for other liabilities

16

56,295

46,563

55,690

Employee benefits


11

--

--

 


58,491

48,857

57,812

Current Liabilities





Trade and other payables

17

11,533

8,826

8,814

Bank overdraft

18

2,700

2,700

2,700

Lease liabilities

9

492

606

609

Derivative financial liability

12

6,090

1,842

2,883

Provision for other liabilities


36

46

46

 


20,851

14,020

15,052

Total Liabilities

 

79,342

62,877

72,864

Total Shareholders' Equity and Liabilities

 

135,847

113,353

129,785

 

 

Trinity Exploration & Production plc

Condensed Consolidated Statement of Changes in Equity

for the period ended 30 June 2022

(Expressed in United States Dollars)

 

 

Share Capital

Share Premium

Share Based Payment Reserve

Reverse Acquisition Reserve

Merger Reserve

Translation Reserve

Retained Earnings/ (Accumulated Deficit)

Total

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000










Balance at 1 January 2021

97,692

139,879

14,764

(89,268)

75,467

(1,650)

(188,332)

48,552

Share based payment charge

--

--

307

--

--

--

--

307

Capital Reorganisation

--

--

(11,485)

--

(75,467)

--

86,952

--

Translation difference

--

--

--

--

--

3

(30)

(27)

Total comprehensive profit for the period

--

--

--

--

--

--

1,644

1,644

Balance at 30 June 2021 (unaudited)

97,692

139,879

14,773

(89,268)

75,467

(1,652)

(187,655)

49,236










Balance at 1 January 2022

389

--

3,784

(89,268)

--

(1,650)

143,666

56,921

Share based payment charge

--

--

305

--

--

--

--

305

Translation difference

--

--

(2)

--

--

3

--

1

Total comprehensive loss for the period

--

--

--

--

--

(324)

(398)

(722)

Balance at 30 June 2022 (unaudited)

389

--

4,087

(89,268)

--

(1,971)

143,268

56,505


 

Trinity Exploration & Production plc

Condensed Consolidated Statement of Cashflows

for the period ended 30 June 2022

(Expressed in United States Dollars)

 

 

Notes

6 months to 30 June 2022

6 months to 30 June 2021

 

Year end 31 December 2021


 

$'000

$'000

$'000


 

(unaudited)

(unaudited)

(audited)

Operating Activities





(Loss)/Profit before taxation


(322)

(128)

2,982

Adjustments for:





Translation difference


(41)

48

(39)

Finance Income


(24)

(62)

(94)

Finance cost

7

94

137

254

Share option expense


316

307

626

Finance cost - decommissioning provision

7

  554

  611

1,222

Depreciation, depletion and amortisation

  8-10

3,884

3,656

7,428

Impairment of property, plant and equipment

8

--

--

96

Inventory Impairment

5

--

--

1,220

Impairment loss/(reversal of impairment) on financial assets


45

993

(754)

Fair value on derivative financial instrument


3,207

2,108

3,149

Other non-cash items


--

--

47



7,713

7,670

16,137

 





Changes In Working Capital





(Increase)/Decrease in Inventory


(463)

(99)

228

(Increase) in Trade and other receivables


( 3,657)

( 3,954)

(3,019)

Increase in Trade and other payables


2,198

1,098

909



(1,922)

(2,955)

(1,882)

Income taxation paid


(2,882)

(1,201)

(1,700)






Net Cash Inflow From Operating Activities


2,909

3,514

12,555

Investing Activities





Exploration and Evaluation Assets


(363)

(1,079)

(3,262)

Computer software and investment in research & development


(24)

--

(401)

Purchase of property, plant & equipment


(5,320)

(3,382)

(9,957)

Performance bond released


--

--

(220)

Net Cash Outflow From Investing Activities


(5,707)

(4,461)

(13,840)






Financing Activities





Finance income


24

62

94

Finance cost


(50)

(87)

(153)

Principal paid on lease liability


(261)

(241)

(480)

Interest paid on lease liability


(44)

(50)

(101)

Net Cash Outflow From Financing Activities


(331)

(316)

(640)

 





Decrease in Cash and Cash Equivalents


(3,129)

(1,263)

(1,925)

Cash And Cash Equivalents





At beginning of period


18,312

20,237

20,237

Effects of foreign exchange rates on cash


(233)

(29)

19

Decrease


(3,129)

(1,234)

(1,944)

At end of period


14,950

18,974

18,312

 

Trinity Exploration & Production plc

Notes to the Condensed Consolidated Financial Statements for the period ended 30 June 2022

 

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 2022 have been prepared in accordance with UK adopted International Financial Reporting Standards ("IFRS") on a going concern basis. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2021, which have also been prepared in accordance with IFRS.

 

The results for the six months ended 30 June 2022 and 30 June 2021 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 2021 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. The interim report has been reviewed by the auditor.

 

Going Concern

 

The Board have adopted the going concern basis in preparing the condensed consolidated interim financial statements.

 

In making their going concern assessment, the Board have considered the Group's current financial position, budget and cash flow forecast.  For the past twelve months the Group continued to operate with no significant effects nor interruptions from the presence of the COVID-19 pandemic.  The going concern assessment has considered the current operating environment including inflationary pressures, supply chain challenges and the potential impact of the volatility of the oil price. In 2022 oil prices have trended in an upward direction to well over US$100 and is currently fluctuating between US$90-100 per bbl (Brent ICE). Oil prices are forecast to remain at elevated levels over the next 12 months, which will continue to positively impact the Group's operations. 

 

The Group started 2022 with a steady operating and strong financial position; 2022 average H1 2022 sales of 2,974 barrels of oil per day ("bopd"), (H1 2021 3,032 bopd), and opening net cash consisting of cash and short term investments of US$18.3 million and US$2.7 million drawn under the Company's overdraft facility as at 31 December 2021.  In making their going concern assessment, the Board considered a cash flow forecast based on expected future oil prices, work activity and production volumes and sensitivities surrounding volatility in crude oil prices, further cost escalation in capital expenditure and reduced production due to potential delays in the onshore drilling campaign.  The base case forecast included the following assumptions:

 

· Future oil prices assumed to be in line with the forward curve prevailing as at July 22, with an average realised oil price of US$84.3/bbl in the period to December 2022.  The forward price curve applied in the cash flow forecast starts at US$90.4/bbl in July 2022, trending down to US$80.0/bbl in December 2022 and to US$76.1/bbl in July 2023.

· Average forecast production for the period from July 22 to December 2022 of 3,288 bopd and for the seven months to July 2023 of 3,509 bopd with production being maintained by RCPs, WOs and swabbing activities as well as 6 Onshore wells (4 conventional wells, 1 horizontal well and 1 deeper well) which started in June 2022 and 3 wells in 2023.

· Potential cost escalations and supplier delays for the Onshore drilling campaign

· SPT now being incurred on the Onshore assets in 2022 due to oil prices exceeding the SPT threshold for small onshore operators of US$ 75.0/bbl which applies until 31 December 2022. This SPT threshold which was put in place in the 2021 Budget and is subject for review for continuation. As such, the benefit of this higher threshold was not considered within our forecasts for 2023.

· The continuing impact of the crude derivative instruments for the remainder of 2022, based on the forward curve prevailing as at July 2022. There are no crude derivatives currently in place for 2023.

· Trinity continuing to progress various growth and business development opportunities

 

As at the current date, Management considers this is a reasonable base scenario, reflecting the outlook of the current production profile and costs. The cash flow forecast showed that the Group will remain in a healthy cash position for at least the next twelve months, and as such being able to meet its liabilities as they fall due. 

 

Further sensitivities considered to the base case cash flow:

 

· 20% reduction in crude oil prices being sustained across the forecast period, noting that the base case pricing is in line with market prices

· 10% cost escalation in capital expenditure across the forecast period

· 10% production decrease over the forecast period

 

Under each of these scenarios the Group's cash balances are sufficient to meet the Group's obligations as they fall due.

 

Based on the cash flow forecast, when combined with mitigating actions that are within the Group's control, the Board 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 interim financial statements, the Board 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 financial statements and is poised for continued growth. 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 interim financial statements.

 

Accounting policies

 

The accounting policies adopted are consistent with those of the previous financial year 31 December 2021 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 2022 and therefore relevant to these condensed consolidated interim financial statements

 

· Conceptual Framework for Financial Reporting (Amendments to IFRS 3)

· IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - Onerous Contracts - Cost of Fulfilling a Contract)

· IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use)

 

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 consolidated financial statements for the year ended 31 December 2021.

Cash and cash equivalents

 

For the purpose of presentation in the condensed consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and 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 the Group's sole customer 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.

 

Impairment of financial assets

 

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.

 

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 Trinidad and Tobago ("T&T") to one customer, Heritage Petroleum Company Limited ("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.

 

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 2021, 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. As at 30 June 2022, the Group held cash at bank of $15.0 million (2021: $18.3 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.

 

Derivative expense  

 



30 June 2022

30 June 2021

 

31 December 2021



$'000

$'000

$'000

Realised derivative expense


  (6,011)

--

(1,293)

FV of derivative financial instruments


(3,207)

(2,108)

(3,149)






Total expense


(9,218)

(2,108)

(4,442)

 

Impairment

 


 

30 June 2022

30 June 2021

31 December 2021



$'000

$'000

$'000

Impairment of inventory


--

--

1,220

Impairment of property, plant and equipment


--

--

96

Total expense 


--

--

1,316

 

There were no impairment charges in the current period. Inventory totaling US$ 0.1 million were written off in July 2022. These items were previously provided for.

 

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 condensed interim financial statements are highlighted below.

 


 

30 June 2022

30 June 2021

31 December 2021



$'000

$'000

$'000

Fees relating to Capital Reorganisation


--

(95)

(113)





 

Exceptional items charge  

 

--

(95)

(113)

 

Income taxation (expense/(credit)

a.  Taxation

30 June 2022

30 June 2021

31 December 2021

Current tax

$'000

$'000

$'000





Petroleum profits tax

2,058

713

982

Unemployment levy

824

285

393


 

 

 

Deferred tax

 

 

 

- Current period

 

 

 

Movement in asset due to tax losses recognised (Note 15)

(2,764)

(2,221)

(5,533)

Movement in liability due to accelerated tax depreciation (note 15)

(42)

(549)

(586)

Income tax expense/(credit)

76

(1,772)

(4,744)

 

Current tax: The Group's effective tax rate varies based on jurisdiction

 

Tax rates:

30 June 2022

30 June 2021

31 December 2021

 

$'000

$'000

$'000

Corporation Tax UK

19%

19%

19%

Corporation Tax TT

30%

30%

30%

Petroleum Profits Tax

50%

50%

50%

Unemployment levy

5%

5%

5%

 

Deferred tax: The Group has a deferred tax asset of $14.3 million on its condensed consolidated statement of financial position which is the amount it expects to recover within 3 years based on the expected taxable profits generated by Group companies over that period. 

 

The increase in the deferred tax asset is related to the increase in realised price and forecasted production.

 

Finance income


30 June 2022

30 June 2021

31 December 2021


$'000

$'000

$'000

Interest income

24

62

94

 

Finance costs


30 June 2022

30 June 2021

31 December 2021


$'000

$'000

$'000

Decommissioning - Unwinding of discount 

(554)

(611)

(1,222)

Interest and other expenses on overdraft

(50)

(87)

(152)

Interest on leases

(44)

(50)

(101)


(648)

(748)

(1,475)

 

Property, Plant and Equipment

 


Plant & Equipment

Leasehold & Buildings

Oil & Gas Property

Other

Total


$'000

$'000

$'000

$'000

$'000

Opening net book amount at 1 January 2022

2,919

1,388

45,200

--

49,507

Additions

1,803

66

3,964

--

5,833

DD&A charge for period

(275)

(93)

(3,146)

--

(3,514)

Translation difference

--

--

2

--

2

Closing net book amount at 30 June 2022

4,447

1,361

46,020

--

51,828







At 30 June 2022






Cost

18,059

3,478

322,168

336

344,041

Accumulated DD&A and impairment

(13,612)

(2,117)

(276,150)

(336)

(292,215)

Translation difference

--

--

2

--

2

Closing net book amount at 30 June 2022

4,447

1,361

46,020

--

51,828


 

Plant & Equipment

Leasehold & Buildings

Oil & Gas Property

Other

Total

 


$'000

$'000

$'000

$'000

$'000

 

Opening net book amount at 1 January 2021

2,028

1,481

34,247

--

37,756

 

Additions

641

10

2,694

--

3,345

 

DD&A charge for period

(187)

(83)

(3,065)

--

(3,335)

 

Translation difference

--

--

3

--

3

 

Closing net book amount 30 June 2021

2,482

1,408

  33,879

--

37,769

 


 

 

 

 

 

 

Period ended 30 June 2021






 

Cost

15,569

3,348

303,696

336

322,949

 

Accumulated DD&A and impairment

(13,087)

(1,940)

(269,820)

(336)

(285,183)

 

Translation difference

--

--

3

--

3

 

Closing net book amount 30 June 2021

2,482

1,408

33,879

--

37,769

 


 

Plant & Equipment

Leasehold & Buildings

Oil & Gas Assets

Other

Total

 


$'000

$'000

$'000

$'000

$'000

 

Year ended 31 December 2021






 

Opening net book amount at 1 January 2021

2,028

1,481

32.247

--

37,756

 

Disposals

--

--

--

--

--

 

Additions

1,328

74

8,794

--

10,196

 

Adjustment for decommissioning estimate

--

--

8,407

--

8,407

 

Impairment charge (note 4)

--

--

(96)

--

(96)

 

DD&A charge for year

(437)

(167)

(6153)

--

(6,757)

 

Translation differences

--

--

1

--

1

Closing net book amount 31 December 2021

2,919

1,388

45,200

--

49,507

 

 






 

At 31 December 2021






 

Cost

16,222

3,412

318,058

336

338,028

 

Accumulated DD&A and impairment

(13,303)

(2,024)

(272,858)

(336)

(288,521)

 

Closing net book amount

2,919

1,388

45,200

--

49,507

 

 

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:

 


30 June 2022

30 June 2021

31 December 2021

 

$'000

$'000

$'000

Right-of-use assets




Non-current assets

608

762

616





Lease Liabilities




Current

492

606

609

Non-current

202

232

97


694

838

706

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 income

 

The condensed consolidated statement of comprehensive income shows the following amounts relating to leases:

 


  30 June 2022

30 June 2021

31 December 2021

 

$'000

$'000

$'000

Depreciation charge of ROU assets




Depreciation

(258)

(251)

(505)









Interest expense (including finance cost)

(44)

(50)

(101)

 

The total cash outflow for leases in June 2022 was $0.3 million (June 2021: $0.3 million)

 

10  Intangible Assets

 


Computer Software

Exploration and evaluation assets

Research and Development

Total


$'000

$'000

$'000

$'000

Opening net book amount at 1 January 2022

496

30,217

46

30,759

Additions

24

219

141

384

Amortisation charge for the year

(112)

--

--

(112)

At 30 June 2022

408

30,436

187

31,031

 

 

 

 

 

Opening net book amount at 1 January 2021

  307

27,042

--

27,042

Additions

111

930

--

1,041

Amortisation charge for the year

(70)

--

--

(70)

Closing net book amount at 30 June 2021

348

27,972

--

28,320

 

 

 

 

 

Opening net book amount at 1 January 2021

307

27,042

46

27,349

Additions

355

3,175

--

3,576

Amortisation charge for the year

(166)

--

--

(166)

Closing net book amount at 31 December 2021

496

30,217

46

30,759

 

Computer Software: Costs incurred in connection with software.

Exploration and Evaluation asset: represents the cost of the TGAL 1 exploration well and further Galeota E&E costs.

Research and Development: In 2021, costs incurred in connection with various renewable energy initiatives.

 

11  Trade and Other Receivables


30 June 2022

30 June 2021

31 December 2021

Due within one year

$'000

$'000

$'000

Trade receivables

6,650

4,545

4,641

Less: provision for impairment of trade receivables 1

(6)

(350)

(6)

Trade receivables: net

6,644

4,195

4,635

Prepayments

1,084

1,886

895

VAT recoverable

5,364

3,677

4,550

Other receivables*

1,174

1,865

767

Less: Provision for Impairment of other receivables

(146)

(1,503)

(100)


14,120

10,120

10,747

 

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 - Heritage net sales receipts have been collected on a timely basis.  Since the Joint Interest Billing ("Jibs") balances are outstanding, an ECL was calculated at 30 June 2022 of $0.1 million (31 December 2021: $0.1 million) against Other receivables.

 

VAT recoverable - As at 31 December 2021 the VAT recoverable amount was $4.6m. During the period ending 30 June 2022, the Group generated future refunds of $1.4 million, net refunds received amounted to $0.6 million.

 

12  Derivative Financial Liabilities

 

The following table compares the carrying amounts and fair values of the group's financial assets and financial liabilities as at 30 June 2022.

 

As at 30 June 2022

  As at June 2021

As at 31 December 2021

 

$'000

$'000

$'000





Derivative Liability

(6,090)

(1,842)

(2,883)

Total

(6,090)

(1,842)

(2,883)

 

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

 

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 2 recurring fair value measurements:


As  at 30 June 2022 $'000

As at 30   June 2021  $'000

As at 31 December 2021

$'000

Opening balance

(2,883)

266

266

Opening derivative instrument realised

2,883

--

(266)

Derivative expense (loss in fair value)

(6,090)

(2,108)

(2,883)

 

 

 

 

Closing balance

(6,090)

(1,842)

(2,883)

 

On 30 June 2022 the crude derivative contracts were valued using a Mark to Market report. The report provides estimated forward looking values on the existing crude derivatives held at 30 June 2022.

 

13  Share Capital



Share   capital

$'000

Share premium

$'000

Total

 

$'000

As at 1 January 2022


38,879,431

389

--

389

As at June 2022

 

38,879,431

389

--

389

 

 

The Company does not have a limited amount of authorised share capital.

 

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 2022 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 LTIP arrangements shown below:

 

30 June 2022

30 June 2021

 31 December 2021

 

$'000

$'000

$'000

At 1 January

3,784

14,764

14,764

Capital reduction

--

(11,485)

(11,485)

Share based payment expense:




Long term incentive plan

305

307

505

Translation difference

(2)

--

--

At 30 June/31 December

4,087

3,586

3,784

 

2022 LTIPs

 

On 7 June 2022, Options over a total of 290,000 ordinary shares were granted under the LTIP in accordance with a revised LTIP scheme ("the Revised LTIP") to members of the Executive Management Team (EMT) in respect of the Company's performance in the year to 31 December 2021. These LTIP awards will vest on 1 January 2025, subject to meeting the performance criteria set and continued employment in the Company.

 

The performance targets set for awards made under the June 2022 Annual LTIP Award will be measured considering both the Company's absolute TSR performance and the Company's relative TSR performance over a three-year period, commencing with the current financial year of the Company (i.e., a measurement period of 1 January 2022 to 31 December 2024).  TSR calculations will be determined by reference to the volume weighted three-month average price prior to the start and end of the measurement period (with the starting average price adjusted for the Share Consolidation). 

 

 

The performance targets provide that:

 

· No portion of a distinct one-half of the June 2022 Annual LTIP Award (the "Absolute TSR Part") may vest unless the Company's compound annual growth rate of TSR over the performance period is at least 10% p.a., for which 30% of the Absolute TSR Part may vest, rising on a straight-line basis for full vesting of the Absolute TSR Part if the Company's compound annual growth rate of TSR over the performance period equals or exceeds 20% p.a.

 

· No portion of the other distinct one-half of the June 2022 Annual LTIP Award (the "Relative TSR Part") may vest unless the Company's TSR over the performance period ranks at least median relative to the TSR performance within a comparator group of companies, for which 30% of the Relative TSR Part may vest, rising on a straight line basis for full vesting of the Relative TSR Part if the Company's TSR over the performance period ranks upper quartile or better relative to the TSR performance within a comparator group.

 

However, an underpin term applies to the Relative TSR Part which provides that, regardless of relative TSR performance, no vesting may ordinarily accrue in respect of the Relative TSR Part unless the Company's compound annual growth rate of TSR over the performance period is at least 10% per annum.

 


June 2022 LTIPs

Grant Date

6 June 2022

Share price at grant dates

GBP135.00p

Exercise price

GBP0.00

Expected volatility

79.0%

Risk-free interest rates

1.83%

Expected dividend yields

0%

Vesting dates

 

1 January 2025

15  Deferred Income Taxation

 

  The analysis of deferred income taxes is as follows:


30 June 2022

30 June 2021

31 December 2021

Deferred tax assets:

$'000

$'000

$'000

-Deferred tax assets to be recovered in more than 12 months

(14,294)

(8,218)

(11,530)

 

Deferred tax liabilities:




-Deferred tax liabilities to be settled in more than 12 months

1,982

2,062

2,025

 

The deferred tax balances are analysed below:


1 January

 

30 June

 

31 Dec

 

30 June

 

2021

Movement

2021

Movement

2021

Movement

2022

$'000

$'000

$'000

$'000

$'000

$'000

$'000

Deferred tax assets

 















Tax losses recognised

  (5,997)

  (2,221)

  (8,218)

 

(3,312)

  (11,530)

  (2,764)

  (14,294)










  (5,997)

  (2,221)

  (8,218)

 

(3,312)

 

  (11,530)

  (2,764)

  (14,294)

 








Deferred tax liabilities

 







Accelerated tax depreciation

  14,347

  (508)

  13,839

 

--

  13,839

-- 

  13,839









Fair value uplift

  (11,737)

  (41)

  (11,778)

 

(37)

  (11,815)

  (43)

  (11,857)


  2,611

  (549)

  2,062

 

(37)

  2,025

  (43)

  1,982

 

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 are probable.  The Group recognises deferred tax assets over a 3 year outlook which is conservative and consistent with prior periods.  There was an increase in the deferred tax assets of $ 2.8 million in the current year (2021: $ 2.2 million increase).  Deferred tax liabilities have reduced by $ 0.0 million (2021: $ 0.5 million decrease) as the temporary differences between the accounting values and tax values decreased compared to the prior period.  The Group has unrecognised tax losses amounting to $ 207.4 million which have no expiry date (2021:  $ 216.3 million).

 

Deferred tax assets and liabilities are not shown offset in this condensed consolidated statement of financial position. Deferred tax assets and liabilities can only be offset 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

Closure of pits

Total

 

$'000

$'000

$'000

6 months ended 30 June 2022




Opening amount as at 1 January 2022

55,220

470

55,690

Unwinding of discount

554

--

 554

Revision to estimates

--

(3)

(3)

Translation differences

54

--

 54

Closing balance as at 30 June 2022

55,828

466

56,295

 




6 months ended 30 June 2021




Opening amount as at 1 January 2021

45,405

470

45,875

Unwinding of discount

611

--

611

Translation differences

77

--

77

Closing balance as at 30 June 2021

46,093

470

46,563

 

 




Year ended 31 December 2021




Opening amount as at 1 January 2021

45,405

470

45,875

Unwinding of discount

1,222

--

1,222

Revision to estimates

8,407

--

8,407

Decommissioning contribution

195


195

Translation differences

(9)

--

(9)

Closing balance at 31 December 2021

55,220

470

55,690

 

Current:

Litigation claims

 

$'000

6 months ended 30 June 2022


Opening amount as at 1 January 2022

46

Settlements

(10)

Closing balance as at 30 June 2021

36

 

 

6 months ended 30 June 2021

 

Opening amount as at 1 January 2021

46

Closing balance as at 30 June 2021

46

 


Year ended 31 December 2021


Opening amount as at 1 January 2021

46

Closing balance at 31 December 2021

46

 

 

 

17  Trade and Other Payables


30 June 2022

30 June 2021

31 December 2021

 

$'000

$'000

$'000





Trade payables

2,733

2,141

2,274

Accruals

5,246

2,931

4,486

Other payables

454

543

492

SPT

3,100

3,211

1,562


11,533

8,826

8,814

 

18  Bank Overdraft


30 June 2022

30 June 2021

31 December 2021

 

$'000

$'000

$'000





Bank Overdraft

2,700

2,700

2,700


2,700

2,700

2,700

 

A repayable on demand overdraft facility of $2.7 million was entered with FirstCaribbean International Bank (Trinidad & Tobago) Limited ("CIBC") during 2020.  The facility was increased on 5 January 2021 by $2.3 million to a total of $5.0 million, and the additional $2.3 million remains undrawn to date.  The facility is maintained to fund working capital requirements of the Group, particularly those arising due to the delay in receiving VAT refunds.

 

Details of the overdraft facility:

Description: $5 million demand revolving credit facility

Interest Rate: United States Prime rate (currently 9%) minus 4.05 % per annum, with a present effective rate 4.95%, subject to a floor rate of 3.95%

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

 

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 non-cash items being DD&A, ILFA, SOE, Fair value gain/loss on Derivatives and Foreign exchange gain/loss.

 

The Group presents Adjusted EBITDA as it is used in assessing the Group's operating performance as management believes it better illustrates the underlying performance of the Group's business by excluding non-cash items not considered by management to reflect the underlying operations of the Group.

 

Adjusted EBITDA is calculated as follows:

 


6 months to 30 June 2022

6 months to 30 June 2021

Year ended December 2021

 

$'000

$'000

$'000

Operating Profit Before SPT & PT

5,351

2,912

9,350





Depreciation, depletion and amortisation

3,884

3,656

7,428

Share option expense

316

307

626

Impairment/(reversal of impairment) of financial assets

45

993

(754)

Fair value of derivative instruments

3,207

2,108

3,149

Foreign exchange (gain)/loss/

(41)

52

14

Adjusted EBITDA

12,762

10,028

19,813










$'000

$'000

$'000

Weighted average ordinary shares outstanding - basic

38,879

38,879

38,879

Weighted average ordinary shares outstanding - diluted

42,550

42,036

42,260


$

$

$

Adjusted EBITDA per share - basic

0.33

0.26

0.53

Adjusted EBITDA per share - diluted

0.30

0.24

0.48

 

Adjusted EBITDA after the impact of Current Taxes (SPT, PT, UL and PPT) is calculated as follows:

 


6 months to 30 June 2022

6 months to 30 June 2021

Year ended  December 2021

 

$'000

$'000

$'000

Adjusted EBITDA

12,762

10,028

19,813

SPT

(5,049)

(1,971)

(5,074)

PT

--

(288)

1,516

PPT/UL

(2,882)

(998)

(1,375)

Adjusted EBITDA after Current Taxes

4,831

6,771

14,880






'000

'000

'000

Weighted average ordinary shares outstanding - basic

38,879

38,879

38,879

Weighted average ordinary shares outstanding - diluted

42,550

42,036

42,260


$

$

$

Adjusted EBITDA after Current Taxes per share - basic

0.12

0.17

0.40

Adjusted EBITDA after Current Taxes per share - diluted

0.11

0.16

0.37

 

Note Adjusted EBITDA for 6months to 30 June 2021 was updated to reflect Covid-19 expenses.

 

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.

 

 

 

(Loss)/Profit $'000

Weighted Average Number Of Shares

'000

Earnings Per Share $

Period ended 30 June 2022




Basic

(398)

38,879

(0.01)

Diluted

(398)

38,879

(0.01)

 

Period ended 30 June 2021




Basic

1,644

38,879

0.04

Diluted

1,644

42,036

0.04

 

Year ended 31 December 2021




Basic

7,726

38,879

0.20

Diluted

7,726

42,260

0.18

 

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 are considered potential ordinary shares. Share Options of 28,954 are also considered potential ordinary shares but 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 2022 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 2022.

 

21  Contingent Liabilities

 

i)  The West Coast Point Ligoure, Guapo Bay and Brighton Marine Outer ("PGB") licences and the Farm-Out Agreement for the Tabaquite Block (held by Coastline International Inc.) have expired. There may be additional liabilities and commitments arising when new agreements are finalised, but these cannot be presently quantified until new agreements are available.

 

ii)  Parent Company Guarantee:

 

a)  PGB - A Letter of Guarantee has been established in substance over the PGB Block where a subsidiary of Trinity is obliged to carry out a Minimum Work Programme to the value of $8.4 million. A clause within the Letter of Guarantee 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. The PGB licence has expired.

 

b)  Galeota - A Letter of Guarantee has been established in substance over the Galeota Block where a subsidiary of Trinity is obliged to carry out a Minimum Work Programme to the value of $0.9 million. A clause within the Letter of Guarantee 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 the subsidiary of Trinity delivers to the Guarantor a certificate duly issued and signed by the Minister of the MEEI. The Letter of Guarantee was effective from 14 July 2021 until the earlier of performance of Minimum Work Programme or the Guarantor has paid the Guarantee amount.

 

iii)  The Group is party to various claims and actions. Management has 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 1 December 2021, Trinity acquired the PS-4 Block Lease Operatorship Sub-Licence. As part of the lease agreement, a Performance Bond of $0.13 million was executed with Heritage on 27 April 2022.

 

22  Events after the Reporting Period

 

i)  Subsequent to 30 June 2022, the Group has received VAT refunds of US$ 2.9 million

 

 

ii)  During July and August 2022, the Group incurred US$1.3 million of hedging costs. As at 31 August 2022, the fair value of the Group's remaining hedge exposure was US$1.9 million. The remaining hedges expire as at 31 December 2022.

Type of Hedge

Index

Sell Put

Buy Put

Sell Call

Buy Call

Production

Execution Date

Effective Date

Expiry Date

Fair Value 31 Aug 22


US$

US$/bbl

US$/bbl

US$/bbl

US$/bbl

bbls




US$ Million

3-Way Cost Collar

ICE Brent

50.0

60.0

74.4

-

12,500

2 Jun 21

1 Jan 22

31 Dec 22

(1.0)

3-Way Cost Collar

ICE Brent

40.0

50.0

80.5

-

15,000

27 Aug 21

1 Jan 22

31 Dec 22

(0.9)

Put spread option

ICE Brent

40.0

50.0

-

-

15,000

14 Jan 22

1 Jul 22

31 Dec 22

nil

 

 

iii)  On 9 September 2022, the Company announced that 1,214,744 unvested options lapsed as at 30 June 2022.  Accordingly, the Company's current issued share capital amounted to 39,884,637, vested but unexercised options amounted to 308,775 (representing 0.8 per cent of the Company's issued share capital) and a further 996,586 options (representing 2.5 per cent of the Company's issued share capital) are "in flight" (i.e unvested and subject to performance criteria).

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END
 
 
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