Trinity Exploration & Pr... Share Discussion Threads

[andrewbyles] 23/5/2024 12:51

Since at least 2016, Trinity has ended its RNSs with, “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.”

That sentence still appears on the front page of the company’s website.

It’s incredibly disappointing to read in this morning’s accounts that, “It became clear during 2023 that the Group would require new capital to fund its portfolio of development opportunities.”;

That’s all the more so considering the $2.1 million wasted on share buybacks and the $240,000 paid out in dividends.

No explanation is provided as to why Jacobin has come in almost two and a half times over budget (I was previously told that $2 million was disputed and that I shouldn’t assume it would be payable, but it looks as though most of that has now been agreed and there’s a provision for the rest).

Opening the accounts with the words, “2023 was an important year for Trinity with key developments in our ambitious growth programme being progressed“ is an offensive misrepresentation of what’s happened. 2023 was a calamitous year in which shareholders lost a significant portion of their investment.

Still, the directors have done the right thing in selling to Touchstone. Note that: (i) directors’ and senior management salaries were $1,093,000 in 2023; (ii) Trinity employed 107 administrative staff (compared with 170 operational staff); and that G&A costs were $7.37 million. Those costs are going to be massively reduced following the takeover, and there may be some saving on the $22.4 million production costs. Those savings will help fund development and enable the larger group to give up part of Trintes production as part of an East Coast farm down without losing the ability to generate cash.

[nocents] 23/5/2024 12:03

No new info in Final Results just out.

[andrewbyles] 22/5/2024 13:02

Looking at Trinity’s articles (which are available on the Companies House website), in order to hold a general meeting at short notice they need 95% of shareholders to vote in favour (which might be risky). Otherwise, a general meeting has to be held on 14 days’ notice and an AGM on 21 days’ notice.

Perhaps they’ll do what needs to be done at the AGM. It’s the cost effective way and it’s not as though the government will be ready to approve everything on June 1st.

I still try to buy Norcros products Sleepy and it’s a shame they couldn’t sort out Johnson Tiles (which I, of course, have on my kitchen and bathroom walls).

[sleepy] 22/5/2024 12:24

Andrew - with great respect (and I mean that — I regarded your Norcros posts as by far the best on their board) I stand by my statement on the shareholder meetings

[andrewbyles] 22/5/2024 12:15

Trinidad would be very happy if it were producing 100,000bopd, but in fact it’s producing just 46,600bopd (according to the most recent figures - see ). 15 years ago it was 110,000bopd.

There’s still time for Trinity to hold a GM this month (the usual time rules can be dispensed with if shareholders vote to do so). Otherwise, the motions can be voted on at the AGM due in June.

We should know more in the next few days as the final results are due before the end of the month and possibly this week.

[che7win] 22/5/2024 09:49

Also, plenty of news events could be on the upside, market has been overly pessimistic and fed on itself recently.Example, US gas prices up 33% in past month.Companies in Trinidad negated gas prices at prices much higher than what TXP gets.Our gas prices for TXP go up 2% per year with a renegotiation after 5 years.But other companies negotiated higher prices, we might have a strong case at year end when production jumps again.Maybe can happen at some stage.Plenty of upside triggers

[nafafa] 22/5/2024 09:47

And that is why my view they should be looking to exploit base production over the next few years, cut back all overhead and pay owners a decent dividend. I do not believe we will fare any better under TXP, post merger. When we are fortunate enough to see TXP peak at 60p, i will take that as an opportunity to get out.

[sleepy] 22/5/2024 09:45

Doesn’t look like the shareholder meetings to approve deal will be held this month

[aqc888] 22/5/2024 00:14

The issue with txp and Trinity is that they’re both operating in Trinidad. A region that’s producing under 100,000bopd in recent years, when that figure was closer to 150,000bopd 15yrs ago. Drilling would appear more difficult and costly than ever, and failures are not all of the fault of management, but rather all the low hanging fruit options are gone. Trinidad has an expected 35years left of oil. Together txp and trinity can focus on the most solid and safe plays. Looking back with foresight it was clear when Trinity downgraded their reserves what was going on. Can’t believe none of us saw it as a process of due diligence before a sale/merger

[nocents] 20/5/2024 20:40

Totally agree.
The codt savings alone are considerable. And SPT looks unlikely for Trin and TXP’s oil before and after the ‘merger’. It gives the new company a chance to expand. Gas at Cascadura. Oil at Coho and BA. Of course things can go wrong, and I don’t like $20m debt. But it gives an opportunty to increase production, which Trin was just not able to do. Nothing guaranteed, but a fair COS.

[che7win] 19/5/2024 21:30

I think that a lot of the recompletions have taken place already, that can't go on at previous years rates, so I think Andrew is on the button here.Better and stronger for both companies together.

[nafafa] 18/5/2024 23:16

Andrew, whilst it may be the case that base production will decline, and as a consequence cost of production will increase, surely the critical issue is the magnitude of the decline. I recall Bruce Dingwall stating that many of the existing wells would keep producing at the same rate for years to come. I have no confidence in the existing management and am suspicious that their claim of declining output was made to support their case for what has turned out to be an ill conceived exploration agenda. Perhaps we should pushing for an independent geotechnical assessment of existing production capability.

[andrewbyles] 18/5/2024 20:07

If you look at the takeover presentation slides on Trinity’s website, you’ll see (on page 3) that, “In October 2023, Trinity engaged a Financial Advisor to assist in exploring strategic and financial alternatives for the Company.”

It seems that the directors realised then that the company no longer had an independent future. More than six months have passed, and it’s almost three weeks since the Touchstone takeover was announced, and there’s only one bid. It doesn’t look as though there are any other bidders.

As for Touchstone, looking at its historic accounts doesn’t assist. It was an exploration company that’s rather suddenly become the largest independent onshore producer of oil and gas in Trinidad, mainly thanks to Cascudura (which started producing last September). It’s generating considerable cash flow as a consequence ($32 million in 2024). Production from Cascudura hasn’t been as smooth as some investors would have liked, but it’s a massive asset and there are another couple of wells due to come on line later this year (maybe there will be delays, but the gas is there). There are a couple of oil wells due to come into production before the end of this month, which may coincide with Jacobin finally providing some meaningful and reliable production.

But even if Touchstone does nothing over the next 12 months other than strip out the duplicate Touchstone/Trinity costs, the increase in profit and cash flow will be considerable.

[lexus880] 18/5/2024 17:01

The question is:
Are there better suites other than TXP, or is TXP just going to gobble up Trin's cash to stay afloat a little longer? I hope not. No one knows for sure, but the tread is your friend, and at the moment, that's downhill.
TXP three years out of the last seven years making a small profit?

[andrewbyles] 18/5/2024 14:50

Your mistake nafafa is to conclude that Trinity has the option of doing nothing and watching the money pour in.

It doesn’t.

Last year Trinity’s free cash flow, according to Cavendish, was $10.9 million from average production of 2,790bopd.

Whilst this year’s free cash flow forecast is similar ($10 to 12 million), it’s based on average production of 2,653bopd. On the face of things it looks good that Trinity can match last year’s cash flow on 5% lower production, but when you account for the few million dollars that will be saved this year as a consequence of the new SPT reform you can see that cash generation falls significantly as production declines.

To remain cash generative Trinity either needs to boost production (which is what was tried with Jacobin) or significantly cut costs (a key part of the Touchstone merger). It could also try to keep its head above water by pouring cash into maintaining base production, but its best efforts still don’t seem able to prevent some decline. If it does nothing, production declines will be significant and cash generation will quickly dry up.

It’s unfortunate things haven’t worked out with Trinity, but the Touchstone takeover is our best chance of making our money back. The cost cutting should be significant and there are numerous opportunities ready for development.

[nafafa] 18/5/2024 12:23

Andrew, after yesterday's further decline in TXP share price they will be acquiring Trinity for less than £18m. Looks like TXP need Trinity's cash to keep themselves going. I have held TXP shares for a number of years so have followed the company, I have not been particularly impressed; many promises but a tale of lack of delivery and disappointing performance. I am becoming increasingly concerned about this acquisition. I believe the best solution for Trinity shareholders is to maintain their independence and to change their strategy. As I have stated previously, if the company concentrates only base production (2p reserves 12m barrels) with no further exploration, it could significantly cut overhead and afford to pay a dividend of $8 to $10m a year at current WTI, that is 20p a share and potential additional bonus as unexploited assets could be sold off. I do not believe management have even considered this strategy, because it does not suit their agenda, although I do not doubt that it would provide the best outcome for shareholders. Trinity management should be forced to reconsider.

[skyship] 17/5/2024 09:34

nocents - 70p - I wish! No, my average price was 105p. Took the largest loss ever made in 55yrs at this game. My own fault for going overweight in a resource stock.

This year going quite well regardless; but certainly impacted on last year's SIPP performance. (All as per Headers in my JDT threads)

[nocents] 16/5/2024 21:14

I think you have to remember that your ave was quite low Sky. 70p? Ours is at £1.28 and more. How could we get our money back?? I don’t like Paul Baay’s ruthlessness as it also applies to shareholders, but I can’t live off what my shares are now worth and have no income. So it was not an easy decision. I also feel that there is potential here, even if I turn out wrong. I don’t like the debt, but the acquisition of Trin will assist it. I had lost faith in the BOD of Trin. Maybe I will do the same in TXP. Maybe not.Time will tell.

[skyship] 16/5/2024 20:52

Hmm - large shareholders views can be as misplaced as anyone else's. On this occasion I think they've been totally and naively conned. TXP is a can of worms compared to the underlying good value in TRIN.

Sorry AB - for some reason you like the "deal". I'm glad to have sold my shares; but mourn the loss of TRIN.

[andrewbyles] 16/5/2024 17:40

Nothing’s guaranteed, but if I didn’t think the deal was good I’d of sold my shares.

I continue to be shocked that people hold shares in companies they don’t like.

The advantage of a stock market is that you can sell your shares at will (albeit only between the hours of 8am to 4:30pm on working days).

If you can’t see potential for share price improvement, the appropriate step is to sell and buy something you like.

If you can’t make your mind up as to whether an investment is good or bad, selecting your own investments isn’t for you and you’d be better finding something else to do with your money.

If you want to follow others (not a great strategy), take comfort from the fact that the large shareholders have already agreed to this deal.

[nafafa] 16/5/2024 17:20

Andrew, let us hope that on this occasion your logic and enthusiasm for this deal does not turn out to be misplaced.

[andrewbyles] 16/5/2024 16:43

The Touchstone/Trinity deal will obviously work.

Simply by removing the duplicate costs, they’ll easily save millions of dollars per year. Last year Trinity’s opex and g&a costs amounted to $26.4 million. Touchstone reckon they can reduce the workforce by between 30 and 40%, and also lose the costs of operating a listed company (7 directors, accountants, auditors, PR people, website people etc).

Those cost reductions will add to the $10 to $12 million of annual cash flow that Trinity is creating and will enable additional exploration.

With Trinity, Touchstone has an excellent future. Even without it, its future looks pretty good with plenty of new developments to come on line (including two more Cascadura wells within the next 4 months).

Given the irrevocable undertakings given by Trinity shareholders and the government’s indicated approval, it’s difficult to see the deal not going through. Other bidders have had 6 months to come forward, but it seems as though none (if there were any) could complete with Touchstone, which has the real advantage of enabling us to share in the benefits of the merger.