Trinity Exploration & Pr... Share Discussion Threads

[nocents] 10/9/2019 21:21

I’m a little more concerned about Malcy’s personal bopd consumption. Bit worrying. Not being rude.

[nocents] 10/9/2019 21:11

OT. Sorry I missed you. Hope it was worth it for you.

[mesquida] 10/9/2019 18:31

nocents.....the Board must surely be as disappointed with the share price as we private shareholders are, and surely they too will have noticed a persistent and sizeable seller operating during the past few months. So far we have not had a holdings RNS, but for sure the Board will have seen movements on the share register, even if those movements have not been large enough to trigger a holdings RNS. Are they able to comment on this ?

[wwick] 10/9/2019 17:59

nocents, another question for consideration 'The HAW intersected net oil reservoir sandstone one and a half times the thickness of those expected. Does this change your yield expectations, previously indicated to be 2x that of vertical well?'

[wwick] 10/9/2019 17:44

nocents, thanks for the offer, consider asking 'How is TRIN's relationship with Heritage developing and what are their expectations from this?'

[nocents] 10/9/2019 17:11

Jeremy and Bruce giving it all as I write. If anyone has questions just post in an hour.

[oilinvestoral] 10/9/2019 16:54

Haven't been able to attend the presentation. Is anyone from this forum attending ? Would appreciate some feedback if you are there!

[spellbrook] 10/9/2019 16:01

Trinity Exploration & Production achieves 20% earnings growth

[oilinvestoral] 10/9/2019 15:51

Hope you're right NCThis is one of my few junior companies I have full confidence in

[imjustdandy] 10/9/2019 15:37

Back to 20p once seller finishes. Cash generation impressive.

[mark10101] 10/9/2019 15:27

More positive coverage on Proactive Investor, ADVFN wont let me post it though...

[nocents] 10/9/2019 15:17

MM. Seller will go. This has happened many times. 2017 Sep was relentless. Then share shot up when gone. A few times since. Can’t know when. Can only rely on buying volume. Your and oilinvestor’s shares will pay off. Just got to wait for effing seller to eff off grrr !
Asap

[oilinvestoral] 10/9/2019 13:54

Happy with today's results. If I finish work early I might even pop into the presentation! Cash rich, no debt, no silly ridiculous placing, drilling HAW, and great strategy!I added more

[marvelman] 10/9/2019 13:36

30,000 added at 11.79...surely we will see that effing seller off soon?

[nocents] 10/9/2019 12:56

Shouldn’t put yourself down like that. Bad for self-esteem.

[nocents] 10/9/2019 12:38

Significant buying here.

[m5] 10/9/2019 12:27

Presentation tonight, which hopefully will attract further interest and more press.

[spellbrook] 10/9/2019 12:26

Today’s interims are titled ‘strong cash flow and operating margins’


proactive

[m5] 10/9/2019 12:19

Very cheap share with a lot of upside. I am amazed we are at this level, however great opportunity IMHO.

[spellbrook] 10/9/2019 12:17

Significant upside

Trinity Exploration & Production
Today’s interims are titled ‘strong cash flow and operating margins’ which is an excellent way of summing up these excellent results, and the second half looks like it is going to be better. Production of 3,008 bopd was up 9% on ’18 and will rise in the second half with the resumption of onshore drilling. One of Trinity’s strengths is a very careful management of opex and capex as well of course as effective overall cost control all of which leads to strong cash flow.

EBITDA increased 20% which is a testament to the strong management across the board, a 7% increase in revenue on a 9% increase in production shows for itself despite the oil price drop and quite how profitable the company is. Conversion to cash is also exceptional at over 90% leaving a cash position of $17.8m with no debt. There is no whingeing about SPT, the company is being managed across a broad range of oil prices and the staff at TRIN are constantly being retrained for new tasks.

Production in the 2nd half has already benefited from the 1st infill well and the second well is expected imminently, this of course is the company’s first High Angle Well which has been highly successful. The ultimate success of this well will take some time to fully assess and Trinity is not going to hurry the process, with a different methodology from a traditional well data will be assessed over 3-4 months. As a result the 2H campaign is slated as ‘up to 8 wells’ which may include another HAW but will be done in the right and proper times. Offshore, Galeota continues to move on with discussions between TRIN and Heritage to move this forward.

The major presentation is this evening and I will attend that so should be able to add a good deal more after that, but I am expecting to see detailed analysis of the company’s DNA. In other words it is a full cycle company that is ahead of many other companies in the space. This can be seen by the SCADA system, an approach with Weatherford for production optimisation where, linked to the cloud, data is reported back every 12 minutes and accordingly speeds up or slows down flow. This digital system cuts opex costs, increases production and reserves and again increases profitability.

Trinity can be described as a highly profitable oil company at pretty much any price, it has flexibility to modernise and deliver under most scenarios and at a very high margin, accordingly it is not wrong to say that these results were not by chance, continued investment leads to growth in the production and hence cash flow. I will add more after the presentation but Trinity is in a very good place, it is the share price that is criminally low for a well funded, high margin growth business with significant upside.

[spellbrook] 10/9/2019 12:15

The share price of Trinity Exploration & Production (TRIN:12p), an independent oil and gas exploration and production company focused solely on Trinidad and Tobago, has suffered in the past 12 months after the oil price plunged by 45 per cent in the final quarter of 2018.

However, the West Texas Intermediate (WTI) crude oil price has subsequently increased by 33 per cent to $56.50 a barrel from its December lows. The fact that Trinity’s share price has yet to recover is in no way a reflection on the operational progress the company has been making. Indeed, first-half average production increased by almost 9 per cent to 3,008 barrels of oil per day (bopd), underpinned by five recompletions and 71 maintenance workovers and reactivations of wells.

It’s more profitable, too. Cash profit after supplemental petroleum tax (SPT) and property tax (PT) rose by a fifth to $6.5m in the six month period, and Trinity’s operating break-even improved by 8 per cent to $26.3 a barrel, or less than half the current spot rate. Cash flow performance has improved markedly, too. Cash inflow from operating activities doubled to $10.4m year on year, buoyed by a $3.9m net increase in Trinity’s working capital position. In turn, net cash has risen by 75 per cent to $17.8m (£14.6m) since the start of 2019.

Trinity commenced a high margin low-cost and low-risk onshore drilling programme of up to eight wells in July to boost output and accelerate profit growth, one reason why analyst James McCormack at house broker Cenkos Securities is expecting the company to increase its average output by 6 per cent to 3,182 bopd in the second half, an outcome that should help drive revenue up to Cenkos forecast of $34.5m, up from $32.2m in the first half of 2019. Trinity also plans 12 recompletions of wells and ongoing workovers and reactivations in the second half, too. Taking these into account, Mr McCormack is factoring in 2019 net average production of 3,182 bopd, up from 2,871 bopd produced in 2018.

Interestingly, Trinity has just drilled its first high-angle well, the industry standard in many basins around the world. It makes sense to do so as Trinity’s management – who own 23 per cent of the company’s equity – aim to yield initial production rates and reserves more than double those achieved from conventional vertical wells.

Sensibly, at the start of the second half, Trinity hedged out more than a quarter of its annual output between $50 and $55 a barrel to protect cash flows. The other benefit of hedging is that it mitigates the impact of SPT which is payable when the oil price rises above $50 a barrel. Reassuringly, chief executive Bruce Dingwall and finance director Jeremy Bridglalsingh point out that the business is free cash flow positive “at any price point [from the low $40s per boe]”, thus providing capital to recycle into drilling new wells.

There is clearly value on offer here. After factoring in closing net cash of £14.6m, Trinity has an enterprise valuation of £29.5m, or a miserly three times Cenkos’ full-year cash profit estimate of $12.5m (£10.3m) after the payment of SPT and PT. The shares are also trading on a thumping 70 per cent discount to Cenkos’ core net asset value (NAV) of 40p a share. Furthermore, ignoring any value in Trinity’s 2C contingent resources of 18.8m barrels of oil equivalent (boe), Trinity’s 2P reserves of 24.5m boe are in the price for only £1.20 per boe, massively below Latin American peers. By comparison, Amerisur Resources (AMER), the oil and gas exploration and development company operating in Paraguay and Colombia, has 25.6m boe of 2P reserves, but these are valued at above £6.50 per boe.

Admittedly, I hadn't envisaged the subsequent plunge in the oil price last autumn after I first advised buying Trinity’s shares a year ago ('Alpha Company Research: Simon Thompson’s oil recovery play', 3 September 2018). However, the investment case I made still holds, a point I made when I last suggested buying the shares around the current price ahead of the interim results ('Exploit Trinity’s undervaluation', 23 July 2019). I maintain my positive stance. Buy.