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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Trinity Exploration & Production Plc | LSE:TRIN | London | Ordinary Share | GB00BN7CJ686 | ORD USD0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-3.00 | -7.69% | 36.00 | 35.00 | 37.00 | 37.00 | 34.50 | 37.00 | 158,365 | 08:27:12 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMTRIN
RNS Number : 6199B
Trinity Exploration & Production
24 September 2018
Dissemination of a Regulatory Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR).
Trinity Exploration & Production plc
("Trinity" or "the Company" or "the Group")
Interim Results
Profitable growth and debt free
Trinity, the independent E&P company focused on Trinidad & Tobago ("T&T"), announces its unaudited interim results for the six month period ended 30th June 2018 ("H1 2018" or "the period").
This was a transformative period for the Company, including the recommencement of drilling activity and continued production growth delivering an uplift in cash generation. In addition, the post period-end saw the Company raise gross proceeds of USD 20.0 million ("the Fundraising") which has significantly strengthened the balance sheet, leaving it debt free and with the cash resources available to continue to profitably grow production and returns.
H1 2018 Highlights
H1 2018 H1 2017 % Change Average realised oil price (USD/ bbl)(1) 60.0 46.3 30 Average net production (bopd) 2,771 2,397 16 Revenues (USD million) 30.1 20.2 49 Adjusted EBITDA (USD million)(2) 9.3 5.9 58 Adjusted EBITDA (USD/bbl)(2) 18.6 13.6 37 Group operating break-even (USD/bbl)(3) 28.5 28.2 1 Operating cash flow (USD million) 5.0 1.7 194 Capital expenditure (USD million) 4.4 0.7 529 Cash balance (USD million) 9.1 11.5 (21) Pro Forma net cash / (debt) (USD million)(4) 19.0 (1.2) N/A
Notes:
1. Realised price: Actual price received for crude oil sales per barrel ("bbl")
2. Adjusted EBITDA: See Note 18 for the calculation of Adjusted EBITDA. Per bbl figures refer to production over the period.
3. Group operating break-even: The realised price/bbl for which the Adjusted EBITDA/bbl for the Group is equal to zero. See Appendix 1 - Trading Summary Table
4. Pro Forma net cash/ (debt): See Post Funding Pro Forma Balance Sheet Extract
H1 2018 Highlights
Operational
-- H1 2018 average production of 2,771 bopd (H1 2017: 2,397 bopd), representing a 16% increase over the corresponding period last year, underpinned by:
- Drilling of 2 new onshore wells. Both drilled efficiently and cost effectively on a turnkey basis.
- 7 recompletions ("RCPs") (H1 2017: 5).
- Base production maintenance through a continuous campaign of 62 workovers ("WO") and reactivations (H1 2017: 44).
Financial
-- Balance sheet significantly strengthened from a net debt position (USD 1.2 million) at 30th June 2017 to a pro-forma net cash position of USD 19.0 million at 30th June 2018 (adjusted for the post period end Fundraise and debt repayments).
-- Adjusted EBITDA increased 58% to USD 9.3 million (H1 2017: USD 5.9 million) and Adjusted EBITDA/bbl improved to USD 18.6/bbl (H1 2017: USD 13.6/bbl), with the increased oil price and production growth leveraging off a relatively fixed operating cost base.
-- Maintained a group operating break-even price below USD 30.0/bbl (H1 2018: USD 28.5/bbl). -- Operating cash flow increased to USD 5.0 million (H1 2017: USD 1.7 million).
-- Capital expenditure for the period amounted to USD 4.4 million (H1 2017: USD 0.7 million), comprising mainly of new wells, RCPs and continued infrastructure investment.
-- Accelerated the repayment of outstanding debt to the Board of Inland Revenue ("BIR") and Ministry of Energy and Energy Industries ("MEEI") (together, "the T&T State Creditors") with total payment over the period of USD 3.3 million. All remaining amounts were repaid in July 2018.
Post Period End Highlights
Corporate
o Funded and Debt Free
-- In July 2018 the Company raised gross proceeds of USD 20.0 million through the Fundraising:
- USD 6.4 million of the Fundraising comprised non-cash rollover by holders of 88% of the Convertible Loan Notes ("CLNs") electing to convert the value of their CLNs into new ordinary shares at the issue price.
- The Company has subsequently repaid, in full, the outstanding debt of USD 2.6 million to the T&T State Creditors as well as the remaining USD 0.9 million of CLNs which were outstanding.
- The Fundraising will enable the Company to accelerate its onshore drilling programme and production, with a planned 8-10 wells per year. The free cash flow which the Company expects to generate will enable it to self-fund new onshore drilling activity from 2020 onward while continuing double-digit annual production growth as it develops its low risk onshore assets.
o East Coast Asset Development
-- The Company has continued to revise the Trintes drilling plan and rework the TGAL Field Development Plan ("FDP"), which offers a significant opportunity to deliver a step-change in production levels in the medium term.
-- The Petroleum Company of Trinidad and Tobago ("Petrotrin") Restructuring Update
-- On 28th August 2018 Petrotrin announced its intention to discontinue refining operations to focus on its upstream exploration and production activities. The Company does not expect this decision to impact the ongoing Sales Agreements with Petrotrin for Trinity's crude oil production, which it anticipates will be consolidated with Petrotrin and others' output and exported as it has been on previous occasions when the refinery had been shut down.
Operational Look Ahead
o Recommencement of drilling activity
-- Signed a turnkey agreement with external drilling contractor for a 6 well onshore campaign, bringing the total for 2018 to at least 8 wells. The first well was spudded in August 2018.
-- The production impact of this drilling programme will be realised towards the end of Q4 2018 into Q1 2019.
o Routine production activity
-- H2 2018 work programme will continue with; RCPs, routine WOs, reactivations and swabbing.
-- An offshore RCP will be undertaken in the Trintes field, which will be the first offshore RCP that Trinity will be doing since assuming operatorship in 2013.
Bruce A. I. Dingwall CBE, Executive Chairman of Trinity, commented:
"With a return to new infill drilling in H1 2018 alongside a continuing programme of RCPs, WOs, swabbing and reactivation activities, Trinity was able to reset its base production at a higher level. In H2 2018, post the fundraise and the settlement of all outstanding debt, we have established a stable, well-funded platform with significant reserves and resources and an established growth trajectory which is ideally positioned to continue growing production, cash flow and shareholder value. With peer leading break-evens and plans to increase production we can grow profitability in the short-term whilst working up a further step-change from future developments.
"The acceleration of our onshore drilling programme has allowed Trinity to position itself to deliver double digit production growth year-on-year, generate significant cash flow and will facilitate self-funded new onshore drilling activity from 2020 onwards whilst selectively pursuing other value accretive opportunities.
"On behalf of the Board I must thank all our staff and our key suppliers in Trinidad for their hard work and support which has allowed Trinity to focus on profitable growth whilst maintaining a safe working environment. 2018 has been pivotal to Trinity thus far and the Board would additionally like to take this opportunity to thank existing shareholders and other stakeholders for their support and welcome new shareholders as we move forward debt free and strongly positioned to take advantage of future opportunities in the changing environment in Trinidad & Tobago"
The Interim Results report is available for download on the Group's website www.trinityexploration.com.
Enquiries
Trinity Exploration & Production Bruce Dingwall, Executive Chairman Jeremy Bridglalsingh, Chief Financial Officer Tracy Mackenzie, Corporate Development Manager +44 (0)131 240 3860 SPARK Advisory Partners Limited (NOMAD & Financial Adviser) Mark Brady Miriam Greenwood Andrew Emmott +44 (0)20 3368 3550 Cenkos Securities PLC (Broker) Joe Nally (Corporate Broking) Neil McDonald Beth McKiernan Derrick Lee +44 (0)20 7397 8900 Pete Lynch +44 (0)131 220 6939 Whitman Howard Limited (Equity Adviser) Nick Lovering Hugh Rich +44 (0)20 7659 1234 Walbrook PR Limited trinityexploration@walbrookpr.com Nick Rome +44 (0)20 7933 8780
Competent Person's Statement
All reserves and resources related information contained in this announcement has been reviewed and approved by Graham Stuart, Trinity's Technical Adviser, who has 36 years of relevant global experience in the oil industry. Mr. Stuart holds a BSC (Hons) in Geology.
About Trinity (www.trinityexploration.com)
Trinity is an independent oil and gas exploration and production company focused solely on Trinidad & Tobago. Trinity operates producing and development assets both onshore and offshore, in the shallow waters off the 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. Trinity operates all of its 9 licences and, across all of the Group's assets, management's estimate of 2P reserves as at the end of 2017 was 23.2 mmbbls. Group 2C contingent resources are estimated to be 24.0 mmbbls. The Group's overall 2P plus 2C volumes are therefore 47.2 mmbbls.
Trinity is listed on the AIM market of the London Stock Exchange 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
During H1 2018, the Company continued to build on the momentum achieved in 2017 through the continuation of the RCP programme and drilling of 2 onshore wells, thereby delivering 16% year-on-year production growth. The H2 2018 activity set of low cost, high return activities will include; RCPs, WOs, reactivations and swabbing activities and the addition of a 6-well onshore drilling programme.
Onshore operations
-- H1 2018 average net production was 1,530 bopd (H1 2017: 1,278 bopd). The 20% increase was as a result of the 2 Infill wells drilled and continued performance from the ongoing RCP (7) and base maintenance WOs and reactivations (45) (H1 2017: 5 RCPs, 34 WOs and 4 reactivations).
-- H2 2018 planned work programme anticipates:
- 6 infill wells which will allow a rebasing of production levels
- Continued RCPs and ongoing base management via; WOs, reactivations and swabbing across all fields.
East Coast operations
-- H1 2018 average production was 1,046 bopd (H1 2017: 909 bopd). The 15% increase in production was due to a WO and reactivation campaign which commenced in 2017 and continued with 13 WOs during H1 2018 (H1 2017 5).
-- H2 2018 work programme will include the first RCP offshore since the restructuring in addition to the programme of routine WOs and reactivations.
-- Trinity continues to invest in maintaining production levels via better generator maintenance strategies, continued pump optimisation and review of alternative artificial lift technologies to augment production rates.
West Coast operations
-- H1 2018 average net production was 195 bopd (H1 2017: 210 bopd). The 7% decrease in production was largely the result of natural production decline.
-- H2 2018 planned work programme will include WOs on key wells to maintain production levels along with the continuation of asset integrity related projects.
FINANCIAL REVIEW
Income Statement Analysis
H1 2018 H1 2017 Change Production Average realised oil price (USD/ bbl) 60.0 46.3 13.7 Average net production (bopd) 2,771 2,397 374 Statement of Comprehensive Income USD'000 USD'000 USD'000 Operating revenues 30,098 20,180 9,918 Operating expenses (excluding DD&A) (22,741) (14,695) (8,046) ------------------------------------------- -------------- ---------------------- --------------------- Operating profit before DD&A 7,357 5,485 1,872 DD&A (4,746) (3,551) (1,195) ------------------------------------------- -------------- ---------------------- --------------------- Operating profit before exceptional items 2,611 1,934 677 Exceptional items 11,616 25,123 (13,521) ------------------------------------------- -------------- ---------------------- --------------------- Operating profit after exceptional items 14,227 27,057 (12,844) Supplemental petroleum taxes (3,650) - (3,650) Other taxes 884 - 884 ------------------------------------------- -------------- ---------------------- --------------------- Operating profit/(loss) after exceptional items, SPT and other taxes 11,461 27,057 (15,610) Finance cost (1,279) (1,177) (102) ------------------------------------------- -------------- ---------------------- --------------------- Profit before income tax 10,182 25,880 (15,712) Taxation credit/ (charge) 5,726 (2,452) 8,178 ------------------------------------------- -------------- ---------------------- --------------------- Profit after income tax 15,908 23,428 (7,534) Currency translation (19) 352 (371) ------------------------------------------- -------------- ---------------------- --------------------- Total comprehensive income 15,889 23,780 (7,905)
Operating Revenues
Operating revenues of USD 30.1 million (H1 2017: USD 20.2 million). The USD 9.9 million increase was as a result of an increase in average realised crude prices and increased production.
Operating Expenses
Operating expenses of USD (27.5) million (H1 2017: USD (18.2) million) comprised of the following:
-- Royalties of USD (10.0) million (H1 2017: USD (5.9) million) -- Production costs ("OPEX") of USD (8.3) million (H1 2017: USD (6.7) million) -- DD&A charges of USD (4.7) million (H1 2017: USD (3.6) million)
-- G&A expenditure of USD (2.9) million (H1 2017: USD (1.6) million), including USD (0.3) million non-cash share option expenses (H1 2017: nil)
-- Other expenses of USD (1.6) million (H1 2017: 0.4) relate to fair value adjustment on the oil price derivative. During H1 2018 the Group paid USD 0.6 million in relation to the oil price derivative, with the fair value adjustment also allowing for the ongoing exposure for the remainder of 2018.
Operating Profit before Exceptional Items
The operating profit (before exceptional items) for the period amounted to USD 2.6 million (H1 2016: USD 1.9 million) and was mainly driven by an increase in crude oil prices and increased production.
Exceptional items
Exceptional items of USD 11.6 million (H1 2017: USD 25.1 million) relate to a revaluation of the embedded call option associated with the CLNs, which is a non cash gain. The embedded call option associated with the CLN was revalued as at 30th June 2018 which resulted in a fair value gain arising on the financial instrument. This gain was eliminated when the CLNs were converted or repaid subsequent to the period end, and as such will not occur in the 2018 full year results.
Supplementary Petroleum Tax ("SPT") and Property Tax
The Group incurred SPT of USD 3.7 million in H1 2018 (H1 2017: nil), on account of the realised oil price exceeding USD 50.0/bbl throughout the six month period. The 2016 and 2017 property taxes which had been accrued in the 2017 financial results were reversed in H1 2018 following the assent to the Property Tax Amendment Act 2018 by the Government of Trinidad and Tobago on 8th June 2018, resulting in a USD 0.9 million reduction in the accrual for other taxes in the period.
Net Finance Cost
Finance costs for the period totalled USD (1.3) million (H1 2017: USD (1.2) million), made up of:
-- Unwinding of the discount rate on the decommissioning provision of USD (0.8) million (H1 2017: USD (0.8) million)
-- Accrued interest on CLN USD (0.4) million (H1 2017: USD (0.3) million) -- Interest on loan - nil (H1 2017: USD (0.1) million)
-- Interest unwind on the liabilities at fair value USD (0.1) million (H1 2017: USD (0.0) million)
Taxation
Taxation credit for the period was USD 5.7 million (H1 2017: USD (2.5) million charge) which is mainly made up of:
-- Recognition of deferred tax assets of USD 5.8 million (H1 2017: de-recognition USD (2.8) million)
-- Decrease in deferred tax liability of USD (0.0) million (H1 2017: USD 0.4 million) -- Unemployment Levy of USD (0.1) million (H1 2017: USD (0.1) million)
As at 30th June 2018, the Group had unrecognised tax losses of USD 213.0 million which have no expiry date.
Total Comprehensive Income
Total Comprehensive Income for the period was USD 15.9 million (H1 2017: 23.8 million)
Cash Flow Analysis
Opening Cash Balance
Trinity began the year with an initial cash balance of USD 11.8 million (2017: USD 7.6 million).
Summary of Statement of Cash Flows H1 2018 H1 2017 FY 2017 USD'000 USD'000 USD'000 Opening cash balance 11,792 7,615 7,615 --------------------------------------------------- -------- -------- --------- Cash movement Net cash inflow from operating activities 4,996 1,704 9,554 Net cash outflow from Unsecured and T&T State Creditor payments (3,254) (7,162) (12,632) Net cash outflow from investing activities (4,403) (650) (3,118) Net cash inflow from financing activities - 10,025 10,373 --------------------------------------------------- -------- -------- --------- (Decrease)/ increase in cash and cash equivalents (2,661) 3,917 4,177 Closing cash balance 9,131 11,532 11,792 =================================================== ======== ======== =========
Net cash inflow from operating activities
Cash inflow from operating activities was USD 5.0 million (H1 2017: USD 1.7 million). H1 2018 included:
-- Operating activities resulting in an adjusted profit before tax of USD 5.7 million (H1 2017: USD 4.2 million)
-- Changes in working capital comprising of a net decrease of USD (0.7) million (H1 2017: USD (2.5) million) excluding changes in working capital relating to the Restructuring of USD (3.3) million (H1 2017: USD (7.2) million)
-- Taxation paid USD (0.1) million (H1 2017: nil)
Cash out ow; change in working capital relating to the Restructuring
Working capital cash out ows relating to the Restructuring amounted to USD (3.3) million (H1 2017: USD (7.2) million) comprising:
-- USD (3.3) million (H1 2017: USD (3.3) million) in quarterly payments to T&T State Creditors -- No payments to Unsecured Creditors were incurred in H1 2018 (H1 2017: USD (3.9) million)
Cash outflow from investing activities
Trinity incurred capital expenditures mainly on production related capex on its onshore assets and infrastructure capex on its East Coast assets totaling USD (4.4) million in aggregate (H1 2017: USD (0.7) million)
Net cash inflow from financing activities
No financing activities occurred in H1 2018 (H1 2017: USD 10.0 million)
Closing Cash Balance
Trinity's cash balance at 30th June 2018 was USD 9.1 million (H1 2017: USD 11.5 million)
Post Funding Pro Forma Balance Sheet Extract
Incorporating the post period end net proceeds from the Fundraising and subsequent debt repayments the like-for-like pro forma would be a net cash position of USD 19.0 million (2017: USD 1.2 million net debt position) based on Management's view. The turnaround from the net debt position on a year-on-year basis to a net cash position was a result of the July 2018 USD 20.0 million Fundraising and settlement of all remaining debts owed to T&T State Creditors and CLN holders which strengthened the Group's Statement of Financial Position as follows:
i. Increase in cash and cash equivalents from USD 9.1 million to USD 18.0 million. This took into consideration the following cash movements post the period end:
-- USD 13.6 million cash proceeds from issue of new ordinary shares -- USD (2.6) million repayment to T&T State Creditors -- USD (1.2) million cost of raising equity -- USD (0.9) million paid to CLN holders
ii. Expunged the Derivative Financial Asset of USD 11.6 million. Following redemption of the CLN the early call option was extinguished and so the Derivative Financial Asset has been expunged from the Pro Forma Balance Sheet.
iii. CLN redemption and repayment - USD 6.4 million of the principal and interest were converted into new ordinary shares (this USD 6.4 million is the non-cash component of the USD 20.0 million Fundraising). The remaining USD 0.9 million of CLNs were redeemed via a cash payment in August 2018.
iv. Full and final repayment to T&T State Creditors of USD 2.6 million which occurred in July 2018.
Balance Sheet Extract H1 2018 H1 2018 H1 2017 FY 2017 Unaudited Unaudited Unaudited Unaudited All amounts in USD million Pro forma(1) Mgmt. View(2) Mgmt. View(2) Mgmt. View(2) ---------------------------------------- ----- ------------- -------------- -------------- -------------- A: Current assets Cash and cash equivalents i 18.0 9.1 11.5 11.8 Trade and other receivables 6.3 6.3 3.7 5.2 Inventories 3.9 3.9 3.7 3.8 Derivative financial asset ii - 11.6 0.2 - Total current assets 28.2 30.9 19.1 20.8 ============= ============== ============== ============== B: Liabilities Non-current liabilities Trade and other payables - - 1.8 1.0 Taxation payable - - 3.6 - Convertible loan note iii - 7.3 6.8 7.0 Total non-current liabilities(3) - 7.3 12.2 8.0 Current liabilities Trade and other payables iv 7.3 9.9 4.3 10.2 Taxation payable 0.2 0.2 3.8 1.7 Derivative financial instrument 1.7 1.7 - 0.8 Total current liabilities(4) 9.2 11.8 8.1 12.7 Total liabilities 9.2 19.1 20.3 20.7 ============= ============== ============== ============== (A-B): Net cash/(debt) position 19.0 11.8 (1.2) 0.1
Notes:
1. Shows half year pro forma balance sheet position post Fundraise and debt repayment
2. States the Face Value of the CLN and MEEI liabilities as opposed to amortised cost stated in the Financials
3. Non-Current Liabilities excludes Deferred Tax Liability & Provision for other liabilities
4. Current Liabilities excludes Provision for other liabilities
APPIX 1: TRADING SUMMARY
A summary of realised price, production, operating break-evens, Opex and G&A expenditure metrics is set out below:
Trading Summary Table
Details H1 2018 H1 2017 % Change Realised price (USD/bbl) 60.0 46.3 30 Production (bopd) Onshore 1,530 1,278 20 West Coast 195 210 (7) East Coast 1,046 909 15 -------------------------------- -------- -------- --------- Group 2,771 2,397 16 Operating break-even (USD/bbl) Onshore 15.7 16.1 (3) West Coast 24.4 29.0 (16) East Coast 27.8 23.2 20 Group 28.5 28.2 1 Metrics (USD/bbl) Opex/bbl - Onshore 11.4 10.8 6 Opex/bbl - West Coast 20.3 24.0 (15) Opex/bbl - East Coast 21.5 17.6 22 G&A/bbl 5.0 3.8 32
STATEMENT OF DIRECTORS' RESPONSIBILITY
The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with International Accounting Standards ("IAS") 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six 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 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
Bruce A. I. Dingwall, CBE
Executive Chairman
Trinity Exploration & Production plc Condensed Consolidated Statement of Comprehensive Income for the period ended 30th June 2018 (Expressed in United States Dollars) ------------------------------------------------------------------------------------------ Notes 6 months 6 months Year ended to 30th to 30th December June 2018 June 2017 2017 $'000 $'000 $'000 (unaudited) (unaudited) (audited) Operating Revenues Crude oil sales 30,085 20,120 44,957 Other income 13 60 210 ------------ ------------ ------------ 30,098 20,180 45,167 Operating Expenses Royalties (10,013) (5,906) (13,755) Production costs (8,259) (6,759) (14,737) Depreciation, depletion and amortisation 8 (4,746) (3,551) (7,055) General and administrative expenses (2,883) (1,630) (4,326) Other operating expenses 2 (1,586) (400) (1,362) ------------ ------------ ------------ (27,487) (18,246) (41,235) ------------ ------------ ------------ Operating Profit before Supplemental Petroleum Taxes and Other Taxes 2,611 1,934 3,932 Supplemental petroleum taxes (3,650) -- (1,533) Other taxes 5 884 -- (497) ------------ ------------ ------------ Operating (Loss)/Profit Before Exceptional Items (155) 1,934 1,902 Exceptional items 4 11,616 25,123 25,718 Finance cost 7 (1,279) (1,177) (2,300) ------------ ------------ Profit Before Taxation 10,182 25,880 25,320 Taxation credit/(charge) 6 5,726 (2,452) 28 ------------ ------------ ------------ Profit for the period 15,908 23,428 25,348 Other Comprehensive (Expense)/Income Currency translation (19) 352 76 ------------ ------------ ------------ Total Comprehensive Income for the Period 15,889 23,780 25,424 ============ ============ ============ Earnings per share (expressed in dollars per share) Basic 19 0.06 0.09 0.09 Diluted 19 0.04 0.07 0.06 Trinity Exploration & Production plc Condensed Consolidated Statement of Financial Position for the period ended 30th June 2018 (Expressed in United States Dollars) --------------------------------------------------------------------------------------------- Notes As at 30th As at 30th As at 31st June 2018 June 2017 December 2017 ASSETS $'000 $'000 $'000 (unaudited) (unaudited) (audited) Non-current Assets Property, plant and equipment 8 52,552 48,202 52,450 Intangible assets 9 25,708 25,362 25,591 Abandonment fund 2,185 1,135 1,650 Performance bond 253 253 253 Deferred tax asset 13 9,948 2,665 4,179 ------------ ------------ ----------- 90,646 77,617 84,123 ------------ ------------ ----------- Current Assets Inventories 3,940 3,730 3,766 Trade and other receivables 10 6,254 3,658 5,155 Derivative financial assets 11 11,616 200 -- Cash and cash equivalents 9,131 11,532 11,792 ------------ ------------ ----------- 30,941 19,120 20,713 Assets held-for-sale -- 7,696 -- ------------ ------------ ----------- 30,941 26,816 20,713 ------------ ------------ ----------- Total Assets 121,587 104,433 104,836 ============ ============ =========== Equity Capital and Reserves Attributable to Equity Holders Share capital 12 96,676 96,676 96,676 Share premium 12 125,362 125,362 125,362 Share warrants -- 71 -- Other equity 14 590 590 590 Share based payment reserve 12,922 12,247 12,553 Reverse acquisition reserve (89,268) (89,268) (89,268) Merger reserves 75,467 75,467 75,467 Translation reserve (1,532) (1,645) (1,678) Accumulated deficit (155,204) (172,429) (171,112) ------------ ------------ ----------- Total Equity 65,013 47,071 48,590 Non-current Liabilities Trade and other payables 16 -- 2,544 881 Taxation payable 6 -- 2,730 -- Convertible loan note 14 3,378 2,729 3,019 Deferred tax liability 13 2,508 2,503 2,538 Provision for other liabilities 15 38,772 26,348 37,151 ------------ ------------ ----------- 44,658 36,854 43,589 ------------ ------------ ----------- Current Liabilities Trade and other payables 16 9,862 7,918 10,092 Taxation payable 6 198 86 1,688 Derivative financial liabilities 17 1,703 -- 762 Provision for other liabilities 15 153 106 115 ------------ ------------ ----------- 11,916 8,110 12,657 Liabilities held-for-sale -- 12,398 -- ------------ ------------ 11,916 20,508 12,657 ------------ ------------ ----------- Total Liabilities 56,574 57,362 56,246 ------------ ------------ ----------- Total Shareholders' Equity and Liabilities 121,587 104,433 104,836 ============ ============ ===========
Trinity Exploration & Production plc Condensed Consolidated Statement of Changes in Equity for the period ended 30th June 2018 (Expressed in United States Dollars) ------------------------------------------------------------------------------------------------------------------------------------ Share Share Share Other Share Reverse Merger Translation Accumulated Total Capital Premium Warrant Equity Based Acquisition Reserve Reserve Deficit Payment Reserve Reserve $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 --------- ---------- -------- ------- --------- ------------ --------- ------------ ------------ --------- Balance at 1st January 2017 94,800 116,395 71 -- 12,244 (89,268) 75,467 (1,997) (195,857) 11,855 Share based payment charge -- -- -- -- 3 -- -- -- -- 3 Other equity net of transaction cost -- -- -- 590 -- -- -- -- -- 590 Issue of ordinary shares 1,876 8,967 -- -- -- -- -- -- -- 10,843 Total comprehensive income for the period -- -- -- -- -- -- -- 352 23,428 23,780 Balance at 30th June 2017 (unaudited) 96,676 125,362 71 590 12,247 (89,268) 75,467 (1,645) (172,429) 47,071 ========= ========== ======== ======= ========= ============ ========= ============ ============ ========= Balance at 1st January 2018 96,676 125,362 -- 590 12,553 (89,268) 75,467 (1,678) (171,112) 48,590 Share based payment charge -- -- -- -- 369 -- -- -- -- 369 Translation difference -- -- -- -- -- -- -- 146 -- 146 Total comprehensive income for the period -- -- -- -- -- -- -- -- 15,908 15,908 Balance at 30th June 2018 (unaudited) 96,676 125,362 -- 590 12,922 (89,268) 75,467 (1,532) (155,204) 65,013 ========= ========== ======== ======= ========= ============ ========= ============ ============ ========= Trinity Exploration & Production plc Condensed Consolidated Cashflow Statement for the period ended 30th June 2018 (Expressed in United States Dollars) ---------------------------------------------------------------------------------------------------- Notes 6 months 6 months Year ended to 30th to 30th 31st December June 2018 June 2017 2017 $'000 $'000 $'000 (unaudited) (unaudited) (audited) Operating Activities Profit before taxation 10,182 25,880 25,320 Adjustments for: Translation difference (675) (735) (663) Finance Income 31 -- -- Finance cost 7 359 348 579 Share option expense 368 3 235 Finance cost - decommissioning provision 7 778 829 1,643 Depreciation, depletion and amortisation 8 4,746 3,551 7,055 Loss on disposal of assets 8 (6) -- -- Impairment of property, plant and equipment 8 -- 732 -- Impairment of inventory -- -- 264 Impairment of receivables -- 348 348 Gain on extinguishment of financial liabilities -- (210) (210) Gain recognised on embedded derivative (11,616) -- -- Fair value zero cost collar 17 1,586 -- 762 Compromised creditor balances (18) (26,568) (26,672) 5,735 4,178 8,661 ------------ ------------- --------------- Changes In Working Capital (Increase)/Decrease in Inventory (163) 57 (243) (Increase)/Decrease in Trade and other receivables (843) 451 (887) Increase/(Decrease) in Trade and other payables 395 (2,982) 2,023 ------------ ------------- --------------- 5,124 1,704 9,554 ------------ ------------- --------------- Taxation paid (128) -- -- ------------ ------------- --------------- Net Cash Inflow From Operating Activities 4,996 1,704 9,554 ------------ ------------- --------------- Restructuring related payments Unsecured creditors -- (3,850) (3,857) T&T State creditors (3,254) (3,312) (8,775) ------------ ------------- --------------- (3,254) (7,162) (12,632) ------------ ------------- --------------- Investing Activities Purchase of computer software -- -- (250) Evaluation and exploration assets 9 (46) -- -- Purchase of property, plant & equipment 8 (4,357) (650) (2,868) Net Cash Outflow From Investing Activities (4,403) (650) (3,118) ------------ ------------- --------------- Financing Activities Finance cost -- (348) -- Issue of shares (net of costs) -- 10,843 10,843 Issue of convertible notes (net of costs) -- 3,030 3,030 Repayments of borrowings -- (3,500) (3,500) ------------ ------------- --------------- Net Cash Inflow From Financing Activities -- 10,025 10,373 ------------ ------------- --------------- (Decrease)/Increase in Cash and Cash Equivalents (2,661) 3,917 4,177 ============ ============= =============== Cash And Cash Equivalents At beginning of period 11,792 7,615 7,615 (Decrease)/Increase (2,661) 3,917 4,177 ------------ ------------- --------------- At end of period 9,131 11,532 11,792 ============ ============= ===============
Trinity Exploration & Production plc
Notes to the Condensed Consolidated Financial Statements for the period ended 30th June 2018
1 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 interim financial statements for the six months ended 30th June 2018 have been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union ("EU"), on a going concern basis. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31st December 2017, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.
The results for the six months ended 30th June 2018, and as at 30th June 2017 are unaudited and do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31st December 2017 were approved by the Board of Directors and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified.
Going Concern
In making their going concern assessment, the Board of Directors have considered the Group's budget and cash flow forecasts taken together with the announcement on 25th June 2018, whereby the Group announced its intention to raise $20.0 million to accelerate growth and fully repay all outstanding debt to the T&T State Creditors and the CLNs.
Subsequent to the period end, the Fundraising completed and the proceeds were used to repay in full the outstanding debt to the Board of Inland Revenue of Trinidad and Tobago ("BIR") and the Ministry of Energy and Energy Industries of Trinidad & Tobago ("MEEI"), as well as all outstanding amounts under the CLNs. The proceeds will also enable the Group to rapidly accelerate its onshore drilling programme and production, with a planned 8-10 wells per year and to allow revision of the Trintes drilling plan and the TGAL Field Development Plan with the Company's East Coast Assets offering a significant opportunity to deliver a step-change in production levels in the medium term.
Following completion of the fundraising in July, the Group repaid the remaining outstanding debt to the BIR and the MEEI amounting to $2.6 million in aggregate. In addition on 15th August 2018, payment was made to settle the remaining debt to holders of the CLNs, amounting to $0.9 million. The holders of CLNs with a value (including accrued interest) of approximately $6.4 million had agreed to convert the value of their CLNs into new ordinary shares pursuant to the Subscription. The Group has thereby completed the full repayment of all outstanding debt and has sufficient capital resources to progress its accelerated drilling programme. For these reasons, the Board of Directors have a reasonable expectation that the Group has adequate resources to continue operational existence for the foreseeable future and the Group therefore continues to adopt the going concern basis of preparing the financial statements.
Accounting policies
The accounting policies adopted are consistent with those of the previous financial year, as set out in the consolidated financial statements for the year ended 31st December 2017, except for income taxes in the interim periods which are accrued using the tax rate that would be applicable to the expected total annual profit and loss and the other policies outlined below. The business is not affected by seasonality.
There are no IFRS or IFRS Interpretations Committee ("IFRIC") interpretations that are effective for the first time for the financial year beginning on or after 1st January 2018 that would be expected to have a material impact on the Group. The Company has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments effective 1st January 2018. Adoption of these standards has not materially affected the way the Group accounts for its revenues or financial instruments. However, the Company will be including the new disclosures required by IFRS 15 from the 2018 year end onwards.
Estimates
The preparation of 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 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 Condensed Consolidated Financial Statements for the year ended 31st December 2017.
Non-current assets (or disposal Groups) held for sale
Non-current assets (or disposal Groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal Groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continued use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal Group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Compound Financial Instruments
Compound financial instruments issued by the Group comprise CLNs that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. Under the terms of the CLNs each holder could after the second anniversary of the issue date serve a Conversion Notice whereby the principal amount plus the outstanding interest could be converted into new fully paid ordinary shares at a Conversion Price of $0.08125. However, the Company had the option to redeem the CLNs in certain circumstances within two years of their issue ("the Two Year Call Option") as described in note 14.
Trinity engaged a specialist valuation team to value the derivative relating to the CLN. The embedded derivative was described as the difference between:
- The actual bond issued - A hypothetical bond without the Group having the option to call the bond early.
The main driver of the valuation compares the redemption value of the bond to the projected conversion value in January 2019. The calculation anticipates that without the early call option Trinity would call the bond on the earliest date, which would in turn trigger investors to convert the bond at this date.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest rate method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
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 assets at fair value through profit or loss financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.
In June 2018 a third party was engaged to conduct a valuation of the derivative financial instruments held namely the embedded derivative relating to the Two Year Call Option within the CLN and the Zero cost collar oil derivative. The valuation methodology used were as follows:
Embedded derivative: In order to estimate the value of the Two Year Call Option at the valuation date, the settlement price of the Note (cash and equity settlement combined) was compared with the value of the CLN with the original terms (i.e. if the two year restriction until January 2019 existed for the whole Note). In estimating the value of the CLNs, an income approach framework and a binomial lattice model was utilised. This model is an implementation by MATLAB of the Tsiveriotis and Fernandes convertible bond model.
Zero cost collar: The oil derivative was modelled as a combination of a Call leg and a Put leg. The Put leg was based on a long position on a strip of oil put options while the Call leg was a short position on a strip of oil call options, all expiring on each month end until the termination date of the instrument. Market data included futures prices and implied volatilities from Bloomberg and interest rates from S&P Capital IQ. The two legs of Asian options utilised a modified Black-76 formula with Turnbull and Wakeman approximation (1991).
2 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 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 2017, which can be found at www.trinityexploration.com.
Zero Collar oil derivative:
On 6th November 2017 a Zero Cost Collar was entered into effective 1st January 2018. The derivative is a combination of a long position on a strip of oil put options and a short position on a strip of oil call options (from Management's perspective). The key terms are summarized below:
-- Trade Date - 6th November 2017
-- Effective Date - 1st January 2018
-- Notional quantity - 25,000 US barrels per month
-- Option Type and Style - Monthly Asian Put (Arithmetic average of all settlement prices in a month)
-- Strike Price per unit - $45 per US barrel for the put options and $59.8 per US barrel for the call options
-- Commodity-OIL WTI
-- Exercise Dates - End of each month until 31st December 2018
The introduction of the collar is one of management's tool used to mitigate risks. There is no other change in the risk management department or in any risk management policies since the year end.
Liquidity risk
Compared to year end, there were changes in the contractual undiscounted cash out flows for certain financial liabilities as follows:
- Zero cost collar put in place - Effective January 2018 the zero cost collar oil derivative was effective. The strike price per unit was $45.0 per US barrel for the put options and $59.8 per US barrel for the call options.
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method.
The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the Group's financial assets and liabilities that are measured at fair value at 30th June 2018.
Level 1 Level 2 Level 3 Total ------------------- --------- -------- -------- ------ $'000 $'000 $'000 $'000 Liabilities Zero cost collar -- 1,703 -- 1,703 Total liabilities -- 1,703 -- 1,703 =================== ========= ======== ======== ======
Fair value measurements using observable inputs (Level 2)
For measuring the zero cost collar at fair value through the profit or loss, an assessment of oil price movement and volatility at 30th June 2018 was performed valuing the instrument at $1.7 million which was determined as follows:
Zero cost collar $'000 1st January 2018 (762) Payments 645 Losses recognised (1,586) 30th June 2018 (1,703) ==========
Group's valuation processes
The Group's finance department includes a team that performs the valuations of financial assets required for financial reporting purposes, including Level 3 fair values. This team reports directly to the Chief Financial Officer ("CFO") who in turn reports to the Audit Committee ("AC"). Discussions of valuation processes and results are held between the CFO, AC and the valuation team at least twice per year, in line with the Group's interim reporting dates. The Group has engaged an external valuation specialist in conducting the valuations on the embedded derivative and zero cost collar.
3 Operating segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions. Management have considered the requirements of IFRS 8, in regard to the determination of operating segments, and concluded that the Group has only one significant operating segment being the production, development and exploration and extraction of hydrocarbons in Trinidad.
All revenue is generated from sales to one customer in Trinidad & Tobago: The Petroleum Company of Trinidad & Tobago ("Petrotrin"). All non-current assets of the Group are located in Trinidad & Tobago.
4 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 financial statements are highlighted below.
30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 Impairment of property, plant & -- 732 -- equipment - FZ 2 Secured creditor compromise -- (6,450) (6,472) Interest on tax compromise -- (5,249) (5,247) Unsecured creditors' compromise -- (15,532) (15,639) Foreign exchange loss on compromised balance -- 663 687 Impairment of receivable -- 348 234 Impairment on inventory -- -- 264 Restructuring -- 577 532 Gain on extinguishment of financial liabilities -- (210) (210) Gain on fair value of financial 11,616 -- -- instrument Impairment on recompletions -- -- 135 Translation difference -- (2) (2) 11,616 (25,123) (25,718) ========== ========== ==============
Exceptional items during the current year:
Fair Value Gain on the valuation of the early call option associated with the CLN - ($11.6 million): In June 2018 a valuation of the embedded Two Year Call Option associated with the CLN was completed. The valuation resulted in a gain of $11.6 million for the Two Year Call Option as at the valuation date of 30th June 2018. See additional details in note 11.
5 Other Taxes 30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 Property tax charges (216) -- (497) Property tax reversal 2016 and 1,100 -- -- 2017 884 -- (497) ========== ========== ==============
The Property Tax Amendment Act 2018 was assented to on 8th June 2018 by the Government of Trinidad and Tobago. The Act effectively waived the obligation to pay Property Tax ("PT") up to December 2017. PT accrued for the years 2016 and 2017 of $1.1 million, has been reversed at the end of June 2018.
6 Taxation Charge/ (Credit) a. Taxation Charge 30th June 30th June 31st December 2018 2017 2017 Current tax $'000 $'000 $'000 * Current period Petroleum Profits Tax -- 44 (926) Corporation Tax ("CT") -- -- -- Unemployment Levy (62) -- (26) Deferred tax * Current period Movement in asset due to tax losses 5,750 2,822 1,317 Movement in liability due to accelerated tax depreciation 5 (392) (389) Unwinding deferred tax on fair value uplift 33 (27) -- Translation differences -- 5 (4) Tax charge/(credit) 5,726 2,452 (28) ========== ========== ==============
The Group has a deferred tax asset of $9.9 million on its Condensed Consolidated Statement of Financial Position which it expects to recover in more than 12 months based on the expected taxable profits generated by Group companies.
30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 b. Taxation payable current Petroleum Profits Tax ("PPT")/Unemployment Levy ("UL") -- 86 66 Due to BIR (PPT,CT and UL) 198 -- 1,622 Taxation payable 198 86 1,688 ========== ========== ============== c. Taxation payable non-current Petroleum Profits Tax/ Unemployment -- 2,222 -- Levy Corporation Tax -- 508 -- Taxation payable -- 2,730 -- ========== ========== ==============
The Taxation payable has been split between current and non-current and represents the principal balance owed to the BIR.
7 Finance Cost 30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 Decommissioning 778 829 1,643 Interest accrued on Citibank loan -- 84 44 Interest unwind on liabilities 142 16 34 Interest on Convertible loan note 359 248 579 1,279 1,177 2,300 ========== ========== ============== 8 Property, Plant and Equipment Plant Land Oil & & Equipment & Buildings Gas Property Other Total $'000 $'000 $'000 $'000 $'000 ------------- ------------- -------------- ------ ---------- Opening net book amount at 1st January 2018 3,767 1,726 46,957 -- 52,450 Additions 205 2 4,434 -- 4,641 Disposal -- (6) -- -- (6) Reclassification of assets between categories (2,470) -- 2,470 -- Depreciation, depletion and amortisation charge for period (784) (70) (3,892) -- (4,746) Transferred to disposal group held for sale Translation difference -- (1) 214 -- 213 Closing net book amount 30th June 2018 718 1,651 50,183 -- 52,552 ============= ============= ============== ====== ========== Period ended 30th June 2018 Cost 10,643 3,111 279,353 336 293,443 Accumulated depreciation, depletion, amortisation and impairment (9,925) (1,459) (229,384) (336) (241,104) Translation difference (1) 214 213 ------------- ------------- -------------- ------ ---------- Closing net book amount 30th June 2018 718 1,651 50,183 -- 52,552 ============= ============= ============== ====== ========== Plant Land Oil & & Equipment & Buildings Gas Property Other Total $'000 $'000 $'000 $'000 $'000 ------------- ------------- -------------- ----------- ----------- Opening net book amount at 1st January 2017 4,201 1,890 53,541 -- 59,632 Additions 27 1 622 -- 650 Disposal -- (9) -- -- (9) Impairment -- -- (732) -- (732) Depreciation, depletion and amortisation charge for period (305) (76) (3,170) -- (3,551) Transferred to disposal group held for sale (187) (108) (7,401) -- (7,696) Translation difference (7) (1) (84) -- (92) Closing net book amount 30th June 2017 3,729 1,697 42,776 -- 48,202 ============= ============= ============== =========== =========== Period ended 30th June 2017 Cost 12,884 3,125 273,230 336 289,575 Accumulated depreciation, depletion, amortisation and impairment (9,148) (1,427) (230,370) (336) (241,281) Translation difference (7) (1) (84) -- (92) ------------- ------------- -------------- ----------- ----------- Closing net book amount 30th June 2017 3,729 1,697 42,776 -- 48,202 ============= ============= ============== =========== =========== Plant & Land & Oil & Equipment Buildings Gas Assets Other Total $'000 $'000 $'000 $'000 $'000 ----------- ----------- ------------ ------ ---------- Year ended 31st December 2017 Opening net book amount at 1st January 2017 4,201 1,890 53,541 -- 59,632 Additions 42 2 2,824 -- 2,868 Disposal -- (9) -- -- (9) Adjustment to decommissioning estimate -- -- (2,868) -- (2,868) Depreciation, depletion and amortisation charge for year (483) (147) (6,425) -- (7,055) Translation difference 7 (10) (115) -- (118) ----------- ----------- ------------ ------ ---------- Closing net book amount 31st December 2017 3,767 1,726 46,957 -- 52,450 =========== =========== ============ ====== ========== At 31st December 2017 Cost 12,901 3,126 272,565 336 288,928 Accumulated depreciation, depletion, amortisation and impairment (9,141) (1,390) (225,493) (336) (236,360) Translation difference 7 (10) (115) -- (118) ----------- ----------- ------------ ------ ---------- Closing net book amount 3,767 1,726 46,957 -- 52,450 =========== =========== ============ ====== ========== 9 Intangible Assets Computer Software Exploration Total and evaluation assets $'000 $'000 $'000 At 1st January 2018 250 25,341 25,591 Additions -- 46 46 Translation difference -- 71 71 At 30th June 2018 250 25,458 25,708 ------------------ ---------------- ------- At 1st January 2017 -- 25,406 25,406 Translation difference -- (44) (44) At 30th June 2017 -- 25,362 25,362 ------------------ ---------------- ------- At 1st January 2017 -- 25,406 25,406
Computer software 250 -- 250 Translation difference -- (65) (65) At 31st December 2017 250 25,341 25,591 ================== ================ =======
Computer Software: New accounting software purchased in 2017.
Exploration and evaluation assets: Costs related to the TGAL exploration well and field development plan.
10 Trade and Other Receivables
30th June 30th June 31st December 2018 2017 2017 Due within one year $'000 $'000 $'000 Trade receivables 3,264 1,967 3,272 Prepayments 1,217 1,001 631 VAT recoverable 1,372 506 807 Other receivables 401 184 445 6,254 3,658 5,155 ========== ========== ==============
The fair value of trade and other receivables approximate their carrying amounts.
11 Derivative financial assets
30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 Assets Assets Assets Put Option-commodity price hedge -- 200 -- Embedded derivative (Two Year 11,616 -- -- Call Option) 11,616 200 -- ========== ========== ==============
A valuation of the embedded derivative associated with the Two Year Call option within the CLN was undertaken as at 30th June 2018. The embedded derivative was fair valued and the gain attributed to:
-- The high probability of the Company exercising the Two Year Call option -- Reduction in the Company's estimated cost of borrowing -- Increase in market price of the Company's shares over the CLN's exercise price
Following the redemption of the CLN post 30th June 2018, the gain on the Two Year Call option will be extinguished.
In 2017 a put option was implemented effective 1st April 2017 which hedged a portion of the Group's monthly production against downside movements in crude oil price below $40.0/barrel until 31st March 2018.
Share capital
Number of Ordinary Share premium Total shares shares $'000 $'000 $'000 As at 1st January 2018 282,399,986 96,676 125,362 222,038 As at 30th June 2018 282,399,986 96,676 125,362 222,038 ============ ========= ============== ========
12 Deferred Income Taxation
The analysis of deferred tax assets is as follows:
30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 Deferred tax assets: -Deferred tax assets to be recovered in more than 12 months (9,948) (2,665) (4,179) Deferred tax liabilities: -Deferred tax liabilities to be settled in more than 12 months 2,508 2,503 2,538 Net deferred tax (assets)/liability (7,440) (162) (1,641) ========== ========== ==============
The movement on the deferred income tax is as follows:
30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 ---------- ---------- -------------- At beginning of year (1,641) (2,569) (2,569) Movement for the year (5,799) 2,407 928 Translation difference -- -- -- Net deferred tax (asset)/liability (7,440) (162) (1,641) ========== ========== ==============
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net. The deferred tax balances are analyzed below:
Movement Movement Movement 30th 1st January 30th June 31st December June 2017 2017 2017 2018 $'000 $'000 $'000 $'000 $'000 $'000 $'000 ------------ --------- ----------- ---------- -------------- ---------- ----------- Deferred tax assets Acquisition (33,436) -- (33,436) -- (33,436) -- (33,436) Tax losses recognised (34,293) -- (34,293) -- (34,293) (5,760) (40,053) Tax losses derecognised 62,233 2,831 65,064 (1,514) 63,550 (9) 63,541 ------------ --------- ----------- ---------- -------------- ---------- ----------- (5,496) 2,831 (2,665) (1,514) (4,179) (5,769) (9,948) ============ ========= =========== ========== ============== ========== =========== Deferred tax Movement Movement Movement 30th liabilities 1st January 30th June 31st December June 2017 2017 2017 2018 Accelerated tax depreciation 14,374 (395) 13,979 64 14,043 -- 14,043 Non-current asset impairment (33,214) (33,214) -- (33,214) -- (33,214) Acquisitions 19,580 -- 19,580 -- 19,580 19,580 Fair value uplift 2,187 (29) 2,158 (29) 2,129 (30) 2,099 ------------ --------- ----------- ---------- -------------- ---------- ----------- 2,927 (424) 2,503 35 2,538 (30) 2,508 ============ ========= =========== ========== ============== ========== ===========
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 is probable. Deferred tax assets of $5.8 million have been recognised (2017: $1.3 million was derecognised) as recoverability is now considered probable. Deferred tax liabilities have reduced by $0.03 million (2017: $0.4 million) as the carrying values of property, plant and equipment and intangible assets which gave rise to the temporary differences have been written down to their recoverable amount. The Group has unrecognised tax losses amounting to $213.0 million which have no expiry date (2017: $218.5 million).
13 Convertible Loan Note ("CLN")
On 11th January 2017 the Company issued at a 50% discount 6,550,000 one dollar, unsecured CLNs. The notes mature 7 years from the issue date at their nominal value of $6.55 million plus quarterly accrued, aggregated and compounded interest. Repayments or conversion prior to the maturity date can be made in certain circumstances:
-- Early Redemption
Subject to the settlement of the debts owed to the BIR and the MEEI the Company can before the second anniversary of the CLN's issue date, redeem all or a portion of the CLN giving 5 business days' written notice to the Noteholder. The Noteholders do not have the option to convert under this arrangement.
-- Redemption
The Company can, after satisfying the debts owed to the BIR and the MEEI or after two years from the issue dates (whichever is the latter), elect to redeem all the CLN before the maturity date. The redemption date in this scenario must not be less than 20 days from the Early Redemption Notice. The Noteholders can serve a Conversion Notice.
-- Conversion
Each Noteholder can after the second anniversary of the issue date serve a Conversion Notice. The principal amount plus the outstanding interest shall be converted into new fully paid ordinary shares at a Conversion Price of $0.08125.
The fair values of the CLN's liability and equity component were determined at the issuance of the note. The CLN recognised in the Statement of Financial Position was calculated as follows:
Total $'000 6 months ended 30th June 2018 Opening amount as at 1st January 2018 3,019 Nominal value of CLN issued -- Interest accrued(2) 359 ------------ Closing balance as at 30th June 2018 3,378 ============ 6 months ended 30th June 2017 Opening amount as at 1st January 2017 -- Nominal value of CLN issued(1) 6,550 Issued at a 50% discount (3,275) ------------ Fair value of CLN 3,275 Expenses incurred (245) ------------ Fair value of CLN (net of costs) 3,030 Equity component (590) ------------ Liability component at initial recognition 2,440 Interest accrued(2) 289 ------------ Closing balance at 30th June 2017 2,729 ============ Year ended 31st December 2017 Opening amount as at 1st January -- 2017 Nominal value of CLN issued(1) 6,550 Issued at a 50% discount (3,275) ---------- Fair value of CLN 3,275 Expenses incurred (245) ---------- Fair value of CLN (net of costs) 3,030 Equity component (590) ---------- Liability component at initial recognition 2,440 Effective interest 105 Interest accrued(2) 474 ---------- Closing balance at 31st December 2017 3,019 ==========
Notes:
(1) The amount repayable on the CLN is the nominal value of $6.6 million plus accrued interest.
(2) Interest is calculated by applying the effective interest rate of 23.7 % to the liability component.
The CLN was initially recognised and measured at its fair value of $3.3 million. The fair value of the liability component was determined using a market interest rate of 22.4% for an equivalent non-convertible bond at the issue date. The liability is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of the notes. The remainder of the proceeds is allocated to the conversion option and recognised in shareholders' equity net of transaction cost, and not subsequently re-measured. See note 21 for post period update on the CLN.
14 Provisions and Other Liabilities Non-Current: Employee Total Decommissioning Retirement cost Benefit $'000 $'000 $'000 6 months ended 30th June 2018 Opening amount as at 1st January 2018 37,151 -- 37,151 Unwinding of discount 778 -- 778 Decommissioning provision 739 -- 739 Translation differences 104 -- 104 ---------------- ------------ --------- Closing balance as at 30th June 2018 38,772 -- 38,772 ================ ============ ========= 6 months ended 30th June 2017 Opening amount as at 1st January 2017 37,970 348 38,318 Unwinding of discount 829 -- 829 Transferred to disposal groups held for sale (12,398) -- (12,398) Unwind of employee retirement provision -- (348) (348) Translation differences (53) -- (53) ---------------- ------------ --------- Closing balance as at 30th June 2017 26,348 -- 26,348 ================ ============ ========= Year ended 31st December 2017 Opening amount as at 1st January 2017 37,970 348 38,318 Restructuring provision settled -- (348) (348) Unwinding of discount 1,643 -- 1,643 Revision to estimates (2,868) -- (2,868) Decommissioning provision 497 -- 497 Translation differences (91) -- (91) ---------------- ------------ --------- Closing balance at 31st December 2017 37,151 -- 37,151 ================ ============ ========= Current: Litigation claims Other Provisions Total $'000 $'000 $'000 6 months ended 30th June 2018 Opening amount as at 1st January 2018 115 -- 115 Provision for litigation claims 6 -- 6 Litigation claims settled (38) -- (38) Provision for drill pit closure -- 70 70 Closing balance as at 30th June 2018 83 70 153 =========== =================== ======== 6 months ended 30th June 2017 Opening amount as at 1st January 2017 470 -- 470 Litigation claims compromised (364) -- (364) Closing balance as at 30th June 2017 106 -- 106 =========== =================== ======== Year ended 31st December 2017 Opening amount as at 1st January 2017 470 -- 470 Litigation claims compromised (355) -- (355) Closing balance at 31st December 2017 115 -- 115 =========== =================== ========
15 Trade and Other Payables
30th June 30th June 31st December 2018 2017 2017 $'000 $'000 $'000 Non-current: Due to BIR Interest on taxes -- 970 417 Due to MEEI -- 670 231 Other Payables -- 904 233 ---------- ---------- -------------- -- 2,544 881 ========== ========== ============== Current: Trade payables 1,085 419 555 Accruals 3,009 1,503 2,547 VAT payable 170 129 272 Other payables 783 903 701 Supplemental Petroleum Tax and Property Tax 2,436 3,708 2,626 Due to BIR Interest on taxes 1,749 775 2,865 Due to MEEI 630 481 526 9,862 7,918 10,092 ========== ========== ==============
16 Derivative financial Liabilities
Derivatives are classified as held for trading and accounted for at fair value through profit or loss unless they are designated as hedges. They are presented as current assets or liabilities if they are expected to be settled within 12 months after the end of the reporting period. (See note 2)
Zero Cost Collar Total $'000 6 months ended 30th June 2018 Opening balance 762 Loss on Fair value of derivative instrument 1,586 Payment (645) ------ Closing balance as at 30th June 2018 1,703 ======
17 Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure used by the Group to measure business performance. It is calculated as Operating Profit before Supplemental Petroleum Taxes and Other Taxes for the period, adjusted for depreciation, depletion and amortisation, share option expenses and other expenses (including the impact of derivative hedge instruments).
The Group presents adjusted EBITDA as it is used in assessing the Group's growth and operational efficiencies as it illustrates the underlying performance of the Group's business by excluding items not considered by management to reflect the underlying performance of the Group.
Adjusted EBITDA is calculated as follows:
6 months 6 months Year ended to 30th June to 30th June December 2018 2017 2017 $'000 $'000 $'000 -------------- -------------- ----------- Operating Profit Before Supplemental Petroleum Taxes and Other Taxes 2,611 1,934 3,932 Depreciation, depletion and amortisation 4,746 3,551 7,055 Share option expenses 368 3 239 Loss on oil derivative hedge instruments 1,586 400 1,362 Adjusted EBITDA 9,311 5,888 12,588 $'000 $'000 $'000 -------------- -------------- ----------- Weighted average ordinary shares outstanding - basic 282,400 270,936 276,746 Weighted average ordinary shares outstanding - diluted 400,708 363,828 395,054 $ $ $ Adjusted EBITDA per share - basic 0.03 0.02 0.05 Adjusted EBITDA per share - diluted 0.02 0.02 0.03
18 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.
Earnings - Weighted Average Earnings Total Comprehensive Number Of Shares Per Share Income/(Loss) '000 $ For The Period $'000 Period ended 30th June 2018 Basic 15,889 282,400 0.06 Diluted 15,889 400,708 0.04 Period ended 30th June 2017 Basic 23,780 270,936 0.09 Diluted 23,780 363,828 0.07 Year ended 31st December 2017 Basic 25,424 276,746 0.09 Diluted 25,424 395,054 0.06
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 Company has two categories of dilutive potential ordinary shares: CLNs and share options. The CLNs are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share. This is calculated as the CLN nominal value $6.55 million plus accrued interest to the second anniversary of $1.0 million divided by the conversion price of $0.08125. Long term incentives of 25,415,998 are also considered potential ordinary shares and have been included in the determination of the diluted earnings per share. Share options of 1,975,084 are considered potential ordinary shares but have not been included as the exercise hurdle would not have been met.
19 Contingent Liabilities
-- The farm-out agreement for the Tabaquite Block (held by Coastline International Inc.) has expired. There may be additional liabilities arising when a new agreement is finalised, but these cannot be presently quantified until a new agreement is available.
-- A Letter of Guarantee has been established 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. The guarantee shall be reduced at the end of each twelve month period upon presentation of all technical data and results of the Minimum Work Programme performed.
-- The Group is party to various claims and actions. Management have 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 financial statements.
20 Events after the Reporting Period
i) On 12th July 2018 the Company completed the Fundraising, raising gross proceeds of $20.0 million through the following:
-- Firm Placing to existing and new institutional investors which raised approximately $11.1 million;
-- Subscription which raised approximately $6.9 million, comprising:
- $ 0.5 million of subscriptions by Trinity Directors and Executive Management; and
- $ 6.4 million in relation to the holders of CLNs who opted to convert the value of their CLNs inclusive of accrued interest at the Issue Price; and
-- Offer to Qualifying Participants which raised approximately $2.0 million.
The Fundraising allowed the Group to repay all outstanding debt to its T&T State Creditors which amounted to $2.6 million in aggregate. Following this final repayment, on 15th August 2018 Trinity settled the remaining outstanding debt to holders of the CLNs who did not elect to convert their CLNs pursuant to the Subscription which amounted to $0.9 million.
ii) On 28th August 2018 Petrotrin announced it is to discontinue refining operations and undergo a companywide restructuring in order to focus on its upstream exploration and production activities. The Company expects that this decision will have no impact on the ongoing Sales Agreements with Petrotrin for Trinity's crude oil production and that the crude oil will be consolidated and exported as it has been previously.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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September 24, 2018 02:00 ET (06:00 GMT)
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