Trinity Exploration & Pr... Share Discussion Threads

[marvelman] 18/10/2019 09:57

wwick...incisive...if you cannot control the Gross Profit (due to net revenue being strangled by the T & T government leaches) then the focus can and must be on costs. Profit can grow even if net revenue is restrained..

[oilinvestoral] 18/10/2019 09:45

Also the point about missed opportunities elsewhere is a very significant one and one that I have had to learn the hard way unfortunately. I'm still very hopeful about TRINs future and have a significant holding here but I value GO's opinion as he highlights some points I haven't delved in as deeply. That's what these forums are for. I thank him for his openness and for sharing. Hopefully the planned PR campaign brings back some positivity to the share price

[nocents] 18/10/2019 08:33

GO.
All that passion for Trinity ( supported by numbers and in the face of SPT and an inept lying govt. a year ago)........seems to have done a total volte face. The budget has allegedly had no “ material impact” upon Trin.Efficiency and ( sometimes disputed) facts seems to be highly respected by you. But apart from opportunity cost for a year what is it that has caused this inversion? Low WTI and tax changes?? Bopd disappointment? Trin rejecting the reality of PR and its hyper -conservatism?
Purely numbers will not answer this. We know Trin’s efficiency. We know their uphill struggle against headwinds. They were always there. All that has really changed is the share price and sentiment. And opportunity cost.
Genuine confused question

[wwick] 18/10/2019 08:25

Thank you GO for your thought-provoking posts. The 10% growth target from 2017 should look something like 2519 (2017) 2771 (2018) 3048 (2019) 3353 (2020). So far so good with TRIN. Personally, a growth target is not everything and I would prefer TRIN to focus more on economics in their public announcements. Given tax implications, payback period and costs should be given more prominence. I’d specifically like TRIN to communicate anticipated economics, this helps us investors understand why they are doing what they are, specifically, the economic benefit targets relating to SCADA and HAWS. What I am really saying is that even with flat or falling production, earnings could grow through business improvements, and we are seeing these improvements introduced.

[nocents] 17/10/2019 22:34

PA. Never say never. Correct. But your post genuinely appreciated in an “ interesting” time and perhaps pokar exchange of views. I watched the Sep.11th interview 3 times. Was pretty much reflection of London meeting but worth watching. In spite of opportunity cost in our cases. Where hope springs sternal!
Disagreement as much as agreement are the food of true debate.
And a genuine goodnight this time.

[nocents] 17/10/2019 22:01

I can’t disagree with the number crunching. Am out of my depth. Nice to hear from MT too.
But there are different circumstances very much at play here.
Such is life.
There are certain posters I miss.
Goodnight all.

[nocents] 17/10/2019 21:49

I apologize for the usual typos. I should’ve checked.

[nocents] 17/10/2019 21:45

Btw. I broke my word. Said too much.

[gabrieloak] 17/10/2019 20:44

PA...nice posting...fact rich which I like compared to some postings...it matters not a jot if you have been here one day, one year or one decade...a reasoned opinion is the only thing that matters. Sometimes you hear on these kind of boards that posters have been around for a long time as if that earns them the right to XYZ...as far as I am concerned, the only right it earns them is the obligation to be less wrong. :-)

To your points:

Yes...good tax breaks
Decline rates: I have heard touted (onshore) 25% year one and 11%-13% thereafter.
Swap $ for £ though if Brexit carries on as it is, that might be moot!
And then you have recompletions for wells which is a plus...you have to start at the bottom and work your way up.

Trin is doing an EXCELLENT job in managing themselves very carefully...I find the comments of a few blaming the management for external factors "ludicrous"...nearly as ludicrous as Malcy's ludicrous comment, but not quite that ludicrous. Bruce is an excellent company facing operator and deserves his pay.

My primary concern surrounds what is in your second to last statement...cash: the ongoing infrastructure costs (annual capex) as well as the drilling capex...with no fiscal reform; do the decline rates and money spent slowly start to drain down as that cash / time factor passes...? What is an appropriate rate of return for your investment...if the numbers don't work as you would like, does the lost opportunity cost elsewhere start to hurt through the erosion of your capital? This last budget had a chance to put pay to that: it did not.

That is the long term headwind.

Does the flywheel of momentum start to slow visibly at some point? ALL of which could be overhauled by a simple and rational 100% drilling capex against SPT (recently shifted from 20% to 25%.)

The silver lining: Trin is very cheap now...hard to see it going much cheaper which makes it a bit of a long term call option with the carry being some potential downside exposure and lost opportunity elsewhere. The valuation gives an appearance of being ludicrously low and if there is fiscal overhaul (better luck in 11.5 months post the general election??) then the shares should rightly double overnight (and I mean that).

Finally, if oil screams higher (and stays there) then it is a 50% upside event for Trinity, accelerating from there as the quarters pass.

Just my thoughts...

GO

[pavey ark] 17/10/2019 19:43

go, before looking at your recent post I'd just like to point out that I appreciate that you would appear to have been here considerably longer than myself (hmmmm c. one month)and I also appreciate the detail included in your post.
My only previous investment in an oil share resulted in an embarrassing and eye watering loss but debt was their failing and the cash here caught my attention and my investment here is limited to 4% of my portfolio of shares.

A couple of points regarding your post:
As you will be aware there are considerable tax breaks in the first two years of a new well's production and although I agree that there should be more info on declines (5% offshore)the economics of these infill /low risk wells looks very sound to me.
In an interview BD said c.£1m a vertical and c. £1.5m for a high angle (must check that).
Even with decrease over time an initial 134bpd goes a long way towards cost.
After the two year tax break the well should chunter on with a greatly reduced Capex against it (albeit at a lower rate).

As far as the tax situation goes TRIN have simply said "it is what it is" and they are just getting on with it.
The options help as does the improvements in production .
Wells producing 50% more than they expected must be good news.

The problems that TRIN has are the characteristics that attracted me ....cash rich...steady, boring.

Most aim oil investors are in it for the big hit, the sudden spike when the big gusher is hit and it is not going to happen here.

[princebuster2] 17/10/2019 18:26

Malcys words are proven over the last two years to be as useless as Whitmam Howards 32p forecast that they keep spouting through the months n years. hahahahahah come on..id listen to Homer Simpson on Trin before Malcy or WH. Experts, dont make me laff!!

[mount teide] 17/10/2019 17:38

go - well argued post - arrived at a broadly similar conclusion last year.

[gabrieloak] 17/10/2019 17:11

"Ludicrous"...Ludicrous means "compelling anyone into buying". Come on Malcy, how many have you ACTUALLY purchased if the price is ludicrous and you won't bet against the proposition??

Some analysis:

Trin targeted 10% yoy growth in frequent documents and placing guidance to shareholders.

2017 2519 bopd
2018 2871 bopd (14% yoy growth)
To meet 2018 target they needed to hit 2771 bopd (they exceeded it comfortably)
How much above 2771 bopd is a further 10% yoy growth?

3048 bopd

In order to hit their target 10% yoy growth for 2019 then overall production needs to be there at 3048 bopd (ALLOWING for the fact that they exceeded it last year...hardly fair to make this extra 4% a rod for their backs).

We know that Q1 to Q3 of this year looks as follows: 3020, 2996, 2816...So this makes Q4 need to be a flat rate of 3360 across the quarter: a tall order but doable!

I wrote a few days ago and pointed out some factors: a company doing all it can and operating as best as possible, a fiscal regime that does not leave enough for that company, running to stand still, oil fields that don't match the fiscal regime, AIM shareholders left with concerning conclusions (company indifference / poor publicity OR bad numbers) and POO.

AIM shareholders have not been treated poorly...there was just nothing to hint at.

So what is wrong here?

Interestingly, the Q4 production last year was 3205 bopd...so, within 9 months and after extensive drilling capex to get it there and maintain it(and facing some normal factors that seem to crop up in this quarter) they are (albeit shortly) back at 2816 bopd (with some unspecified extra inventory yet counted in).

What does that tell EVERYONE invested in Trinidad shares about decline rates: new wells and old? Not satisfactory but not unusual.

A fiscal regime that is indifferent to the fact that oil is PINNED in the worst possible place for Trin Oilers: can you imagine if this tax was 100% allowable against drilling capex (as lobbied by trin), what would have happened? Circa $15 mln would have been put into drilling new wells ON TOP OF what is being put in currently.

Where would that have output? Answer: >>10% yoy as guided and a company healthily growing. And when I say growing, I mean growing for shareholders and govt alike...profits, bopd, dividends, expansion, Royalites, ORR, property taxes etc and new stealth PPT of 12.5%.

I think I have always been harsh on the opaque nature of Trin's communication but the more I come to understand it the more I get that they have nothing particularly stellar to say because they are so hamstrung, particularly in this perverse oil environment that hits them so hard.

So to counterbalance Malcy, Ludicrous, yes...ludicrous fiscal regime...ludicrous, yes...shortsighted politicians. Ludicrous, yes...inaction while the price of oil is hammering your country's oilers and doing nothing about it. Ludicrous, yes...thinking your oil fields can sustain the fiscal implications.

Not so ludicrous market pricing when all the "current" factors are considered .

[nocents] 17/10/2019 16:11

Brief conversation today. HAW performing well above average vertical well . Will be extended as and when appropriate to selective other wells. Same with Scads. Second well only started producing late August.Well 3 not included as stated in rns. 4/5 and 6 to follow. Further drilling Q1 2020. 3,400 at year end to be expected and is pretty darned good. Not been that high in 6 yrs.
Trinity happy with the Way they are proceeding but of course not with share price.I have further questions re. hedging effect and Trients /Tgal etc for Monday.
Share price is in Malcy’s words
“ ludicrous”. That’s AIM.As I say at times like tgis ...what a buying opportunity. I bought at 1.49p Jan 2016 when all else were selling. I persuaded another holder to do the same. To me this is another of those times where sentiment allows the opportunity.
End

[oilinvestoral] 17/10/2019 15:15

Bought 25,000 again today. The only slight issue in the RNS was the weather during Q3 causing shutdowns. They are still optimising the HAW well. We should have a better idea of where we stand with it during the upcoming presentations. The cash reduction was expected as we are perusing a heavy investment programme. I'm done topping up. Won't buy anymore until we have a clear path above 12p or unless the shares fall dramatically! For now I'm happy to sit & watch this play out.

[spellbrook] 17/10/2019 11:40

Trinity Exploration & Production
A 3rd quarter operational update from Trinity this morning which shows a return to drilling, four new wells in the period including the first High Angle Well which was in line with expectations. Of these two came on production in the quarter, one just after and one is imminent. Two further wells are to be spudded in the programme this quarter. The 3rd Q showed some modest production issues such as weather related electrical supply disruption as well as bottle necks occurring due to rig certification which has now been cleared. Accordingly the base production at the year end is expected to be some 3,400 bopd.

The company described the new pilot SCADA system in some detail at the recent results presentation, its technology looks to be groundbreaking and TRIN say that they have seen a ‘material production increase’ and a more extensive roll out of the programme is being planned for the coming months. Also the technical and commercial discussions relating to Galeota are continuing with various energy related ministries and Heritage and technical partners.

TRIN has cash of $15.6m in the balance sheet, down slightly due to drilling capex but I expect the company to be free cash flow generating for the longer term. A further hedge was put in place when oil prices spiked after the drone attack on Saudi Arabia which seems eminently sensible and which partially mitigates the effect of SPT. Trinity remains in a very strong position, Chairman Bruce Dingwall says ‘we continue to focus on increasing our low-cost high margin production including using new technologies to maximise returns and move forward as a free cash flow generating business with significant upside potential.’ With the share price offering change from 10p a share, the value in this business is incredible and the discount to my target price is simply ludicrous, one way or another investors must realise that Bruce Dingwall has experience in delivering value for shareholders and I for one would not bet against him doing it again with Trinity.

[nocents] 17/10/2019 11:27

Slice. You will have to wait a while to do so. But I am a great believer in addressing grievancrs directly. I hope you get the opportunity and actually do it.
More people should.
But I agree fully with Pavey Ark’s analysis.

[nocents] 17/10/2019 11:16

Pavey Ark.
Much appreciated comment. 6 yr holder here. Glad you wisely purchased and are on board.

[pavey ark] 17/10/2019 11:01

I thought that the results were certainly positive and I added.

These results show a very steady increase in production and a management doing exactly what they said they would do.

Anyone disappointed in these results may not have been paying attention.

The recent well results and the new Weatherford kit are very encouraging.

[slicethepie] 17/10/2019 10:22

Bruce needs to realise that his massive salary rise was a slap in the face to employees as well as shareholders, to me it says a lot about the individual. It has stopped me buying more until I have a chance to put the question to him personally.

[nocents] 17/10/2019 10:14

Anyone with anything positive to share?