Trinity Exploration progresses production growth strategy

The AIM-traded company, following the difficulties of 2015 and 2016 when the board and management “worked to preserve value” for shareholders and stakeholders, now had a “clear strategic focus” going forward, Dingwall claimed.

That focus was to grow its reserves and production to maximise the cash flow from its assets, while achieving a market value that was more reflective of our underlying assets and business.

“As discussed alongside our preliminary results in May, production had declined significantly from average levels of 3,600 barrels of oil per day in 2014 to current levels of approximately 2,500 bopd due to a lack of investment,” the company said in its release prior to the AGM on Friday morning.

“Notwithstanding, it is important to emphasise that the underlying asset base remains intact and therefore growing production is a direct function of investment into these assets.

“This is in contrast to many oil and gas companies that are reliant on successful exploration, appraisal and or development or M&A activity.”

The funding required to stabilise operations and recommence value extraction from the asset base was received in January, the company noted.

Following receipt of funds, the primary focus during the first half had been to initiate essential maintenance and upgrades to Trinity’s infrastructure and to sustain base production levels whilst undertaking parallel planning activities to grow production across the portfolio from a range of workovers, swabbing, re-activations, re-completions and new infill drilling.

“The significant reductions to both OPEX and G&A costs achieved so far, have enabled the company to maintain and enhance cash margins despite a lower oil price environment.

“To date, the group has also put hedging in place - through the purchasing of put options - which covers over 35% of the group's production should the WTI oil price fall below $40.00/bbl over the next 12 months.”

The board said those steps, in conjunction with cash balances as at 31 May of $12.4m unaudited, meant the company was “well placed” to grow as a producing, cash flow positive business of scale.

“I look forward to providing a further update early in the second half of the financial year,” Dingwall said.