20th February 2014
Trinity, the leading independent E&P company focused on Trinidad and Tobago, is pleased to update on its Q4 2013 operations and outline its expected operating programme for 2014.
Key highlights:
· Group production growth of 23% and reserve growth of 56% (excluding TGAL-1 discovery) since IPO in February 2013
o Net Q4 production averaged 4,210 boepd
o 2P reserves of 49mmbbl
· TGAL-1 oil discovery confirms material resources (management estimates STOOIP of 50-115mmbbl), and highlights potential for further low risk, infrastructure-led exploration upside and reserves along the Galeota Ridge
o Development concept and engineering work underway to deliver an approved Field Development Plan (“FDP”) for TGAL
· Ended 2013 with cash of US$25 million, debt of US$16 million and undrawn debt facilities of US$25 million
Outlook:
· Resources will be focused on taking the TGAL-1 discovery to an approved FDP and delivering first oil as rapidly as possible. The further high grading of exploration prospects along the Galeota Ridge is also being fast tracked. On success, these prospects would also form part of a phased Galeota Ridge development
· Moderately grow production through infill drilling and recompletions
· 2014 net average production rate expected to be 3,800 – 4,500 boepd
· The Company is actively reviewing business development opportunities in Trinidad consistent with its stated strategy
Joel “Monty” Pemberton, Chief Executive Officer of Trinity, commented:
“In 2013, Trinity delivered production growth through a successful infill drilling campaign both onshore and offshore. As a result of this programme and the success of TGAL-1, the Company’s resource base has grown considerably. This ambitious programme was delivered safely and effectively. Our strategy is to maintain our growth trajectory through completion of the FDP for the TGAL area, continued infill drilling at our onshore and offshore Trintes assets and high grading our exploration portfolio through further technical and commercial work. In addition, we continue to view the mature Trinidadian basin as offering considerable potential for asset realignment between companies and we are actively pursuing several commercial and business development opportunities that are consistent with our strategy.
Trinity generates positive operating cash flow from its existing production base and remains in a financially stable position. Effective capital allocation, to deliver the greatest value to the Company and its shareholders, continues to be the central objective for the Board and management team.”
Overview
Trinity has delivered production growth of 23% and reserve growth of 56% (excluding the TGAL-1 discovery) since the IPO in February 2013. The Company’s TGAL-1 discovery has added considerably to Trinity’s resource base and demonstrates the potential of Trinity’s Galeota license. Key local industry stakeholders understand the valuable role independent E&P companies can play in maximising the potential of Trinidad’s resources and the landscape continues to rapidly evolve to encourage further investment. Trinity continues to play an important leadership role in assisting in making the case for the evolving independent E&P sector in Trinidad.
Q4 2013 Operational Review
During the fourth quarter, Trinity’s net production averaged 4,210 boepd. Key fourth quarter operating activities included:
West Coast
Trinity completed two recompletions at the MP-8 platform which concluded the planned programme of a total of seven recompletions. Net Q4 2013 production averaged 618 boepd. Production at the Brighton field has recently been impacted by more rapid than expected declines from the recently recompleted wells due to more gas being liberated from the wellbores and waxing issues at the important ABM-151 well. Trinity also spudded the El Dorado exploration well in early December 2013. This well was plugged and abandoned in February 2014 having encountered sub-commercial volumes of oil and gas.
Onshore
Trinity drilled and completed one onshore well (at the Guapo field) which is producing at a stabilised rate of c. 60 bopd. Net Q4 2013 production averaged 2,163 bopd.
East Coast
The Company drilled one infill well at the Trintes field, the B11X well, which was brought onstream at an initial production rate of 265 bopd. During the period a number of important upgrades to the rig were completed and a new personnel transfer system was installed before drilling operations were re-commenced at the end of December. Net Q4 2013 production averaged 1,428 bopd. Trinity also drilled the successful TGAL-1 exploration well which encountered oil in five reservoir quality sands. Preliminary management estimates indicate gross original oil in place of 50 – 115 mmbbl of oil.
Liquidity
Trinity ended 2013 with cash of US$25 million, debt of US$16 million and undrawn debt facilities of US$25 million. Trinity continues to benefit from positive operating cash flow from its existing production base and is in a stable financial position.
2014 Outlook
A key focus for 2014 is to progress the TGAL-1 discovery to an approved FDP so as to achieve first oil as fast as possible and to high grade the exploration prospects on the Galeota and PGB licences. Specifically, Trinity’s 2014 plans are as follows:
West Coast
A coiled tubing clean out and additional perforations are planned at ABM-151. Diagnostic work is underway to review options to enhance production from the new workover wells by relieving back pressure on the flow lines. Trinity continues to review its six well infill drilling programme at the Brighton field.
Onshore
Trinity has temporarily suspended its onshore drilling campaign. This has been done to ensure the approvals to drill are secured and associated operating synergies and cost savings of a multi-well programme can be realised. Once this has been completed, drilling will recommence. In aggregate, the planned programme is expected to deliver moderate production growth throughout the year.
East Coast
At the Trintes field, Trinity has identified a further five infill targets in the M-sand that can be drilled from the Bravo and Delta platforms. Trinity has commenced drilling at B9, the first of these locations. As well as the M-sand, B9 will also target deeper reservoir potential in the O, OO and P sands which, on success, could open up a number of additional follow-on drilling opportunities.
Trinity’s drilling team have recently designed a new high angle well with a “J” type profile. “J” wells are designed to intersect the reservoir in the horizontal plane and thus expose much more reservoir to the well bore, deliver higher IP rates and allow the conventional deployment of electrical submersible pumps. Such wells could have a significant impact at Trintes and the overall TGAL development strategy. “J” profile wells have been drilled with great success in Brunei.
Trinity will advance engineering studies relating to the development of Trinity’s recently announced TGAL-1 discovery. Critical to that FDP is re-processing the existing 3D seismic database over the entire Galeota license (including TGAL) with interpretation expected to be concluded in Q3 2014. The results of this work will be integrated into Trinity’s subsurface modelling in order to high grade Trinity’s exploration and development drilling inventory across the entire block.
Budget
Trinity’s total capital budget for 2014 is forecast to be US$21 million, of which c. US$6m is related to infrastructure and non-production spending (e.g. subsurface capex), US$7m is for exploration costs relating to the El Dorado well (incurred in January 2014) and the remainder is for production drilling.