Trinity Exploration & Pr... Share Discussion Threads

[grannyboy] 31/7/2018 11:17

Well you have to see 'some' potential in these otherwise why would you be invested...but if you can't see that with just ONE of the Ortoire wells being a success, it could nearly reach the total production of trin..

[mark10101] 31/7/2018 11:04

Hi MT, interesting post, I can certainly see the interest in TXP, but find it hard how you see such blue sky for TXP yet not for TRIN who is in a superior position. All your excitement and lack of detailed analysis could be applied to TRIN. You appear relaxed about dilution in the coming months in TXP yet claim it has been disaterous here. The latest raise by TRIN was also done at near 1000% to the oil bear market low of 2017, just over 1 year ago!

As they say each to their own. I see massive potential in the coming months here at TRIN but risks at TXP. I am not going to post much going forward and look forward to the autumn where I think the recent raise at TRIN will be seen in better context.

[mount teide] 31/7/2018 10:23

Mark - some thoughts - First let me say I am no 'spreadsheet Phil', preferring the Warren Buffet investment approach of looking at the quality of the assets, experience and track record of the management and sector fundamentals.


IMO the principal investment risk/reward difference between TXP and TRIN over the next 12 months is the outstanding potential of TXP's Ortoire Block exploration prospects recently announced at the AGM and due to be drilled from January 2019.

Each of the 5 prospects has potentially very large reserves and are described as "low risk" and "world class" by TXP's technical management for the various reasons the COO and CEO covered in their AGM presentations.

In the event of success each prospect could be worth many, many multiples of the current TXP market cap.

With regard to development drilling - TXP is planning to drill by year end 2019 - up to 30 wells from Jan 2018 - mostly from existing cash flow. This is likely to more than double production. Whereas TRIN is planning to drill 12 wells during the same time period. I estimate TXP is currently generating gross annual revenue from each new well of $2.75m against a drill cost of circa $0.75m at current oil prices.

Placings: In the Copper sector post the H1/2016 recession bottom, 4 separate material placings to accelerate development and exploration drilling has not stopped a very large copper sector investment of mine - Asia Met(ARS) - from appreciating up to 1,500% in valuation - indeed the last placing earlier this year was taken in its stride at a 1,100% premium to the recession low. Having access to that placing money enabled Asia Met to fast track a number of work streams on its exceptional exploration assets that continue to add considerable value - underpinned by the double whammy effect of a recovering copper sector and strong copper market fundamentals.

In long term, highly cyclical commodity markets the post recession recovery stage(average 5-8 years with high volatility) was probably best described by Warren Buffet as: "A rising tide that lifts all boats" ie its easy to make money when you've survived a long brutal recession where you've cut your costs to the bone to survive, and now with a largely fixed price business, find the product you're selling has entered a new long term rising price environment generated by a half decade waterfall reduction in exploration drilling investment that has seen the Oil and Gas reserve replacement ratio in 2017 drop to an unprecedented 11% from a previous decade low of 50% in 2012!

IMO TXP is the mirror image of Asia Met in the O&G sector but about a year behind in its recovery - ask the highly knowledgeable ARS investors who filled their boots at circa 1-2p in late 2015/early 2016 about the impact of the risk of placings on their investment and the answer you would get back might be ; "it did't stop me from turning £10k into £100k-£150k with plenty more upside potential as the company continues to add value from exploration operations, as commodity market pricing strengthens further over the years ahead, before reaching its next cycle high probably around 2023-25"

What has changed regarding the TXP business since the oil market went into recession in 2013 and bottomed in H1/2016:

The long term, highly cyclical oil & gas market commenced a new recovery stage
Operating and employment costs have been dramatically reduced to survive
Targeting the deeper plays has seen a 100% increase in production per new well
Drilling costs have fallen by circa 42%
A production development inventory of 208 drill locations has been identified
Annual programme of 20-24 Recompletions fully offset annual field decline rates
5 ultra high impact, low risk exploration prospects targeting very large reserves have been identified on the Ortoire Block
Oil price has risen well over 100% since the Q1/2016 recession lows.
Most Multi National and National oil companies have cut O&G exploration budgets to the bone over the last 5 years.
2017 was yet another record low year for discovered conventional volumes globally and the replacement ratio hit an all time low of just 11%.

TRIN has experienced many similar macro and operational changes/long term benefits - the main difference BEING that TXP has stolen a march over TRIN and the other T&T on-shore producers with the scale and pace of its post recession production development programme and the hugely transformational potential of its near term ultra high impact, low risk, low cost on-shore exploration drilling programme.

By comparison I see TRIN as a low risk investment offering very good upside potential over a 2-3 year outlook - whereas I see TXP and ARS as slightly higher risk investments but with totally transformative near term development and exploration upside potential.

All three businesses have excellent management with a proven track record of success operating in long-term, highly cyclical markets that are still in the early stages of recovery - imo this hugely underpins the investment case.

Asia Met's management rode the last commodity cycle recovery/boom stage in 2000-2008 via a junior miner called Oxiana Metals that they developed from a £3m market cap South East Asian and Australian based minnow at the recession low point in 2000, into a company that was valued at $6bn on takeover some 7 years later. They are following exactly the same model with Asia Met - as the CEO said recently "what we are doing is not rocket science" - I increasingly see TXP as the Asia Met of the small cap oil and gas sector.

Kaz metals is another commodity sector example - fell 95% during the recession through to H1/2016, has since risen nearly 1,100% at the recent peak - the good news for Kaz shareholders? Today it is still valued at less than half it's inflation unadjusted previous commodity cycle peak in 2010.

Moral of the story - NEVER UNDERESTIMATE THE INVESTMENT RETURN POTENTIAL OF LONG TERM, HIGHLY CYCLICAL MARKETS AFTER THEY ENTER A NEW RECOVERY STAGE!



AIMHO/DYOR

[marvelman] 31/7/2018 08:47

MT...good to know and thank you for your candour

[mark10101] 31/7/2018 08:31

MT, given you have in-depth knowledge on TRIN and TXP can you lay out your risk/reward analaysis given TRIN and TXP now have the pretty much the same enterprise value (£33m TXP against £40m TRIN). My understanding is TXP have less reserves and 1000bopd less production. Also as the enterprise value suggests they have debt.

It seems to me that significant risk lays ahead for TXP at this level, certainly for those who find it hard to stomach fund raising. TRIN have a $30m war chest at a time when significant opertunities are forecast for the T&T environment.

[mount teide] 31/7/2018 08:14

marvelman - 'May I ask if you are still holding a position in TRIN?'

Recently reduced to 700,000 shares - will be retaining this as a core long term holding.

As posted previously, while I believe TXP offers better risk/reward over a 12 month view - if TXP were not around, then TRIN would be my principal small cap oil investment for the next 2-3 years - during which I believe TRIN will do very well.

AIMHO/DYOR

[nafafa] 31/7/2018 07:42

Except the business is now de risked and can bring forward investment. Might even get to pick up the balance of shares I was after for 15p, or less, which would be an added bonus!

[marvelman] 31/7/2018 07:22

Mount Teide
9 Jul '18 - 12:05 - 1214 of 1607
0 6 0
WITJ

I still hold 800,000 TRIN shares

MT

Your input is always factual although, perhaps understandably, rather pointedly highlighting the merits of TXP against TRIN. Your posts remain valid nevertheless and highly respected even on this battered TRIN forum. May I ask if you are still holding a position in TRIN?. Whether you do or not I do believe there has been a significant rotation out of TRIN to TXP following the disillusionment with the TRIN BOD and 800,000 shares,if sold, would have been part of the said rotation into TXP and add some weight to my supposition.

[diseasex] 30/7/2018 13:15

Nice bullish chart on WTI. not so much on TRIN.

[mount teide] 30/7/2018 11:40

Despite all the operational and financial progress since March 2017 together with the oil price rising nearly 50%, it is disappointing to note that the share price is back where it was 16 months ago.

Without that huge, heavily discounted and largely unnecessary placing the share price may well have been North of 30p now.

[mark10101] 27/7/2018 11:25

Who knows Law, we will only find that out in September. As I believe you are pointing to, with high oil price profitability and previous cash balance we should have seen our cash relatively flat. We know they are investing in infrastructure and drilled two new wels as well as preparing for future infil wells. Snapshots of cash balances can be misleading. September should paint a clearer picture.

My focus is on the statement below, the closing comment from Bruce who decided it was worth diluting both his core holding and future management incentive plan to get his hands on cash now.

“as we move forward debt free and ideally positioned to take advantage of future opportunities as the environment in Trinidad & Tobago evolves”

[lw425] 27/7/2018 10:58

Look can someone please explain:

End March cash balance $12.2m

End June cash balance $9.1m

WTF!!!

All in a high oil price period.

I thought this company made monthly net cashflow (after debt repayments).

[mark10101] 27/7/2018 10:55

MT, come back in a month and post comparisons, like you say it is amazing how quickly portfolios can swing. With TXP getting very close to TRINS enterprise value the valuation gap in TRINs share price is presenting an opportunity IMHO.

[mount teide] 27/7/2018 10:48

marvelman - 'There is surely still a hefty overhang being sold off by the fortunate few who can make a profit from the many of us who have paid the price of their good fortune.'

Spot on - the fortunate few who never had any interest whatsoever in TRIN other than to take advantage of the short term money making opportunity offered to them by management in return for supporting the huge placing at a massive discount to the recent highs WANT THEIR FAT PROFITS NOW - until their greed is fully sated the share price will be going nowhere.


What a difference 2 months and a huge surprise placing has made to my investments!

13.5p TXP - May
18.5p TXP - July
+37%

27.5p TRIN - May
16.5p TRIN - July
-40%

Buying TRIN at the peak in May would today require a 133% share price increase just to match the performance of my TXP investment over the last few months.

AIMHO/DYOR

From an investor still smarting at being hoodwinked by the TRIN management as a result of them consistently highlighting that debt was being reduced far faster than planned - the result? A share-price increase to 27.5p allowing the management to deliver a 15p surprise placing for themselves and friends to benefit from. The benefit of hindsight suggests systematic manipulation of the share price from 27.5p by some of those who would benefit from the placing.

Don't expect any help or sympathy from the FCA for what has gone on - they consider that a drop in suspicious trades prior to the announcement of equity placings from 30% to 20% of ALL transactions over the last 10 years is progress!

If their forensic analysis is so good that they are able to accurately measure the level of insider trading activity - it begs the question why are so few people ever charged for these offences? Answers on a postcard to the SFO!

The long in the tooth cynic might suggest it could have something to do with the fact that the FCA are funded in FULL by the very industry they have responsibility to REGULATE, and it wouldn't be good for business to have too many shysters exposed!

[marvelman] 26/7/2018 15:40

There is surely still a hefty overhang being sold off by the fortunate few who can make a profit from the many of us who have paid the price of their good fortune. I also believe there is or has been a rotation into the much plugged TXP from here.

[dunderheed] 26/7/2018 15:33

Exactly in 6 months time I have a feeling this will look a lot more different and in a positive way!!

[otemple3] 26/7/2018 15:30

Sentiment and lack of exposure imho. It will come good, as fundamentals will shine through. Despite oils strong performance, investors are not yet interested but that time will come. BS is strong and production is growing so I am just going to sit and wait for what will ultimately be a rewarding pay day!

[nafafa] 26/7/2018 15:21

The placing out of the way should have left Trin with £10 mil plus in the bank and debt free. On current production levels and oil price the post tax profit must be in excess of £15 mil pa and yet the share price languishes. What’s holding the share price back - sentiment, lack of exposure or something more sinister?

[diseasex] 26/7/2018 13:42

time to change a broker then I would say

[chrisshaw] 26/7/2018 13:40

Is anyone still waiting to receive their money back from the placing. I applied for 40,000 shares (£6,000) but only got 13,500 in the placing so am due back around £4,000.I am with selftrade, I have been told they cannot give me a date wheh the money will be returned. My wife is wating for £6,000 to be returned.

[dunderheed] 26/7/2018 13:17

1593, agree

[mark10101] 26/7/2018 13:13

MT that was my point he now has a relatively small holding. The pain was felt before coming to AIM with the purpose of raising capital. Anyway I think all T&T companies face a promising future. I prefer TRIN due to ability to now take advantage of any opportunities that may arise over the coming months. Let hope all prosper.

[marvelman] 26/7/2018 12:58

Well lets hope its not a placing based on a 28% discount to the prevailing share price Mount Teide...:-))