Trinity Exploration & Production
A cracking set of figures from Trinity this morning shows the company firing on all cylinders, beating short term production forecasts and on target to achieve medium term goals.
With high oil prices giving average realised prices of nearly $60 and production by the year end of over 3,000 bopd the adjusted EBITDA was up 51% to $19.2m and margins were 31% or $18.3/bbl. With a break even price of below $30/bbl Trinity is looking like a very attractive play in terms of enterprise value.
The raise ensured all debt paid off and provides funds for the onshore drilling campaign. 2P reserves overall were up 6% with pride of place going to the onshore number up 26% which is highly impressive after the increase in production . Production for the year was 2,871 bopd, up 14% after 8 new onshore wells, 17 recompletions and an increase in active offshore producing wells including a continuous campaign of workovers and reactivations.
As for production targets TRIN are expecting an increase of 10% and with the optimism emanating from the TGAL Area development plan which has the potential to ‘achieve a step change in production and value for the company as we target our medium term production goal of 7,500 bopd’. The company also slip in to the RNS that they are well placed to take advantage of any suitable inorganic growth opportunities that may arise, no Chinese education plays here but they may present the odd chance…….
Chairman Bruce Dingwall is unsurprising upbeat, after a ‘significant ‘ year and a low-cost work programme funded by a strengthening balance sheet Trinity ‘faces the future with a growing confidence ‘, I’m not surprised, Trinity is in great shape and looking good for the future, the shares are ridiculously cheap.
A business as usual statement from RKH this morning on the financial front, good cash flow which covers G&A costs and $40.4m of cash and no debt.
The best news comes from progress being made on the Sea Lion Phase 1 development where FEED has been completed, the contractor LOI’s progress to full agreements is well advanced and the FDP and EIA’s are at a final stage with the FI Government. With the finance structure also progressing there is further good news, the vendor financing has been agreed to the tune of $400m worth of funding for the project. Of most interest must be the PIM submission, this is the Project Information Memorandum and is the formal document for the debt application which is expected to be submitted in Q2 2019 and is a key milestone.
Elsewhere all is as expected, arbitration continues, the Greater Mediterranean continues to deliver successfully. All now depends on the last remaining milestone as described by CEO Sam Moody and then Sea Lion can move to the development stage when ever patient shareholders can reap their reward.
After the build up to the Alkaid appraisal well the news that the existing discovery was confirmed pleased investors, today’s news will not. Finding the West Sak secondary target water wet will be a major disappointment and given that the bad result effectively voids the chances for success in the Ugnu formation this is truly a horrible double whammy.
The company remains upbeat about the Brookian zone which flowed 80-100 bopd and hope that with a horizontal well will deliver ‘significantly higher rates’. This is clearly a massive setback and as the company says will now rework and analyse all key data from the Alaska programme. Who would have thought that so soon after backing into Alaska, Pantheon would be going back to East Texas with a view to re-drilling VOBM-1?