17th Jul 2014 08:44
LONDON (Alliance News) - Trinity Exploration & Production PLC Thursday said it has signed a deal to acquire Centrica PLC's 80% interests in two offshore Trinidad blocks for a headline payment of USD23 million, while warning that it expects to be at the low end of full-year production guidance after production rates fell in its second quarter.
The oil and gas exploration and production company with operations in Trinidad and Tobago said the agreement is for Centrica's interests in Blocks 1a and 1b, which contain four gas discoveries and have aggregate gross 2C resources of 268 billion cubic feet, increasing the company's resource base by 42%.
Trinity said the gas is fully appraised but currently undeveloped, so the company is targeting first production from the project in 2017 or 2018 for sale to the domestic gas market in Trinidad.
The company said, due to previous investment of roughly USD220 million by previous owners, the project will be a fast track, low-cost greenfield development with an expected plateau production rate of 80 million cubic feet of gas per day.
"We are acquiring four high quality gas discoveries which can be rapidly monetised with a conventional low-cost field development plan," Chief Executive Joel Pemberton said in a statement. "Trinidad is a well-developed, world-class domestic gas market with a need for significant new volumes in the near term. It is our intention to secure a gas sales agreement and finalise a field development plan in the next 12-18 months."
Trinity said the transaction is expected to be complete in the third quarter, and it will fund the initial acquisition using its USD20 million undrawn debt facility and existing cash resources.
The deal is part of Centrica's ongoing asset divestment strategy after the company cut its 2014 earnings outlook in May, due to extreme winter weather in the US, mild conditions in the UK, and the intense pressure that has been put on energy providers in the UK in recent months by politicians and consumer groups.
Centrica is planning to sell its loss-making Langage, Humber and Killingholme UK gas-fired stations and in May sold 40% of its gas and liquids assets in Canada to Qatar Petroleum International for CAD200 million, strengthening its relationship with the Qatari major.
Trinity said in a separate statement on Thursday that its net production for the second quarter ended June 30 was 3,613 barrels of oil equivalent per day, a fall of 9.2% compared to its previous quarter as production at its East coast operations were hit by an equipment failure.
It said that an electric submersible pump was replaced in late June and its current production rates have increased to 3,750 barrels per day, but it now expects to only reach the low end of its 3,800 to 4,500 barrels per day production guidance for 2014.
The company said that workover operations on two wells at its west coast operations are scheduled for the fourth quarter and external approvals have been secured for six new onshore infill wells with an additional six onshore infill well locations.
"Despite technical challenges during the first half, our operational team has shown determination, and the development of the portfolio remains on track. We look forward to the second half and the next operational phase," Pemberton added.
Trinity Exploration shares were down 0.5% to 94.50 pence while Centrica shares were down 0.6% to 308.50 pence during early trading on Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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