An update from Trinity Exploration & Production PLC (LON:TRIN) on Wednesday confirmed that the turnaround plan is working out, thanks in part to improved market conditions.
The Trinidad based oiler told investors it has seen a step-change in its financial performance, delivered during a period of transition – following its financial restructuring and relaunch last year.
In an operational update ahead of interim results, due September 25, the company said that it continued the upward trajectory in production into the second half.
Overall, for the six months to June 30 net production averaged 2,397 barrels of oil per day, compared to 2,659 bopd in same period of last year, while realised prices were reported at US$46.4 per barrel up from US$32.8 in the previous year.
The company added that it has had a ‘very robust’ operating netback of US$13.5 per barrel, versus US$3.3 per barrel. Revenue for the period amounted to US$20.1mln, up from US$16.1mln. The oil firm’s balance sheet was stronger with a US$11.5mln cash balance, up from US$5.1mln.
Trinity’s ‘clear strategic focus’
In Wednesday’s statement, chief executive Bruce Dingwall said: "Trinity has a clear strategic focus going forward, which is to grow our reserves and production to maximise the cash flow from our core assets while achieving a market value that is more reflective of our underlying assets,” said Bruce Dingwall.
“This will be delivered through financial discipline, the efficient deployment of capital and by delivering on the potential of our diverse and deep portfolio of low-cost production and development assets.
He added: “I must thank all our staff and stakeholders for their hard work and support through this period of significant operational preparation and activity.”
City analysts are encouraged
In a note, Cantor Fitzgerald analyst Sam Wahab highlighted that the Trinity team successfully initiated essential maintenance and upgrades during the first half, sustaining production above 2,500 barrels of oil per day, meanwhile, planned activities should grow production in the future.
“Whilst the focus has been primarily on the onshore segment of the business, Trinity has not neglected the offshore, with a dedicated work-over team dispatched to progress activities at the company’s Trintes field.
“We therefore remain confident that Trinity will meet its 3,000 bopd production guidance within 12 months.
With the company’s balance sheet transformed, Trinity has sufficient capital availability to execute its low cost, high margin growth strategy, in our view.”
Elsewhere, in a separate note, WH Ireland analyst Brendan Long highlighted that Trinity is looking for “step-change growth”, coming from the Trintes Field and the Galeota Ridge project.
“Trinity is in a transition period, making it of increased interest.
“The key metrics suggest operational stability and an improved financial position reflecting exposure to rising oil prices inter alia.
“The strengthened foundations of the company set the scene for next steps. Production guidance for the year of 2,600-2,800 b/d is ambitious from low capex investments and we see the trajectory as positive and recognise incremental barrels will have higher netbacks. The mid-term run rate of 3,000 b/d will require investment in infrastructure and the company intends to hit this target in the next 12 months.”