21st Oct 2015 08:45
LONDON (Alliance News) - Trinity Exploration and Production PLC Wednesday said it has agreed to sell its stakes in five licences in Trinidad to Touchstone Exploration Inc for a total of USD20.8 million, representing the first major milestone achieved since it launched its strategic review.
Trinity shares were up 89% to 9.45 pence per share on Wednesday morning, having jumped to 10.75p in earlier trade.
The company will sell its interests in the WD-2, WD-5/6, WD-13, WD-14 and FZ-2 licences and the related fixed assets to Touchstone. Together, those licences represent all of the company's onshore acreage.
The company launched a strategic review of the company back in early April as it tried to monetise its assets and even considered selling off the entire business. It was under pressure to repay its USD13.0 million of outstanding debt to its lender Citibank, and the bank has given at least eight extensions to Trinity to give it more time to complete its review.
On Wednesday, Trinity said it has received its ninth extension from Citibank, giving it until Friday to repay the USD13.0 million debt. Although the company has secured a deal, it is unclear when the deal will be formally completed, giving Trinity access to the funds it needs to repay that debt.
Trinity has received USD2.1 million from Touchstone and will receive the balance once formally completed. Trinity said it expects the deal to be completed "in the fourth quarter", as it needs approval from authorities in Trinidad and Tobago and its shareholders.
Trinity admitted it will need a further extension from Citibank, which if granted would be its tenth. It plans to convene a general meeting "in due course" for shareholders to approve the deal.
The licences sold were producing around 1,574 barrels of oil per day in August and had a carried book value of USD17.7 million at the end of that month. However, those blocks made a USD2.3 million loss in the first eight months of 2015.
Following the deal, Trinity still has a portfolio of offshore assets in Trinidad that contain net 2P reserves of 18.5 million barrels of oil equivalent and contingent resources of 21.7 million barrels of oil equivalent.
Its remaining assets are currently producing around 1,333 barrels of oil equivalent per day, suggesting the sale will result in the company's production being cut by more than half.
"Trinity continues to focus on increasing operational efficiencies by optimising well performance and cost efficiencies to ensure the business remains sustainable in a low oil price environment" it said.
Trinity's main focus going forward is the TGAL field on the east coast of Trinidad, in which it has a 65% working interest. It hopes to have a field development plan finished before the end of 2015. It will initially focus on the reserves in the TGAL field that lie near its adjacent Trintes field, in which it holds a 100% stake.
Trinity believes there is between 150.0 to 210.0 million barrels of oil in place at TGAL and said it has 17 drilling targets which would be capable of extracting the first 22.0 million barrels of oil. The initial revenues generated would then allow for reinvestment in other facilities and pipeline.
On its licence areas on the west coast of the country, the company said it could consider infill drilling on the Brighton Marine field, in which it has a 100% stake, and on the Brighton Marine Outer field in which it holds a 70% stake.
By Joshua Warner; [email protected]; @JoshAlliance
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